Shadrack Mutie Muthiani & 8 others v Stima Sacco Credit Co-operative Society Limited & Evelyn Mmbishi Inziani [2021] KECPT 236 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.404 OF 2020

SHADRACK  MUTIE  MUTHIANI & 8 OTHERS............................................................CLAIMANT

VERSUS

STIMA SACCO  CREDIT  CO-OPERATIVE  SOCIETY  LIMITED ...............1ST RESPONDENT

EVELYN MMBISHI  INZIANI...............................................................................2ND RESPONDENT

RULING

1.  By a Notice of  Motion  dated  19. 10. 2020 and filed  on  21. 10. 2020and amended  by a Notice  of  Motion  dated  11. 2.2021 and  filed on 12. 2.2021 and the Supporting Affidavit, the Applicants/Claimants have  moved  this tribunal  seeking  inter alia  the following  orders :

1.  Spent

2.  That pending  the hearing  and determination  of this  Application,  the  1st Respondent  by itself,  its servants, agents, employees and/or  anybody  whatsoever deriving  under it  be restrained  from  making  any deductions against  the Applicants/Claimants  accounts in a bid  to offset  the  2nd  Respondent’s loan.

3.  That pending  the hearing and  determination  of this suit,  the 1st Respondent   by itself,  its servants, agents, employees and/or  anybody  whatsoever deriving  under it  be restrained  from  making  any deductions  against  the Applicants/Claimants  accounts in a bid  to offset  the  2nd  Respondent’s loan.

4.  spent

5.  That pending  the hearing  and determination  of this of this Application, the 1st Respondent   by itself,  its servants, agents, employees and/or  anybody  whatsoever deriving  under it  be restrained  from  making  any deductions  against  the  1st to  9th  Applicants/Claimants  shares deposits, dividends and savings  in the Sacco  in a bid to offset  the 2nd Respondent’s  loan.

6.  That pending the hearing  and determination  of this of this suit, the 1st Respondent   by itself,  its servants, agents, employees and/or  anybody  whatsoever deriving  under it  be restrained  from  making  any deductions  against  the  1st to  9th  Applicants/Claimants  shares deposits, dividends and savings  in the Sacco  in a bid to offset  the 2nd Respondent’s  loan.

7. That  a mandatory  injunction  be issued  compelling  the 1st  Respondent  to reinstate  the 1st , 2nd ,6th , 8th, and 9th Applicants/Claimants  deposits  in the Sacco  which deposits  amount to Kenya  shillings  seventy  seven  thousand four  hundred  and thirty  four (Kshs.77,434/=) seven  hundred  and twelve  thousand  two hundred  and sixty  three  (kshs.712,263/=) and five  hundred  thousand  (Kshs.500,000/=) ninety  nine thousand  eight  hundred  and forty  nine  (Kshs.99,849) and seven  hundred  and twelve  thousand  two hundred  and sixty  three  (Kshs.712,263/=) respectively.

2.  The Application  is supported  by the grounds  on  its  face together  with the  Supporting  Affidavit  sworn by  Mr. Shadrack  Mutie  Muthiani,the  1st  Applicant /Claimant and  on behalf of the other  Applicants/Claimants.

The same  is  dated  11. 2.2021 and filed  on  12. 2.2021.

3.  The Notice of  motion  is opposed by the Respondent’s  Replying  Affidavit  dated  16. 4.2021 and filed  on 27. 4.2021.

4.  The Tribunal  ordered that  the application  be disposed  off by  way of  written submissions.

5.  The Applicants/Claimants filed  their  written  submissions  on the 12. 5.2021 and the  same  are dated  12. 5.2021. The Respondent  filed their  written  submissions  on  8. 6.2021.  The same  are dated  27. 5.2021.

APPLICANTS/CLAIMANTS CASE

The gist  of the  applicant/ claimant application  is that:

(i)   They guaranteed  a loan advanced  to the  2nd Respondent by the  1st Respondent.

(ii)   That  the 2nd  Respondent  defaulted  in repayment  of the loan so guaranteed.

(iii)   That recovery  was  made unlawfully  and unprocedurally  without first  notifying  them  of the default.

(iv)   That the  1st Respondent  did not  inform  them of  the exact  amount  of loan  disbursed  to the  2nd Respondent.

(v)  That  the 1st  Respondent  unlawfully,  and unprocedurally  sent, electronically,  texts  and email  messages  to the Applicants  requiring  payments and highlighting  the amounts  it  intended  to recover  from them.

RESPONDENT’S CASE

The gist  of the Respondent’s  case is  whether:

(i)  The  loan  totaling  to  Kshs.6,530,000/= was advanced to the  2nd Respondent  and the  same  was guaranteed by  the Applicants/Claimants  and the  2nd  Respondents  salary  and deposit savings.

(ii)   The Applicants/Claimants were  issued  with  notices  of default  of loan  payment  via SMS texts and  emails.

(iii)  That  the exact  loan amounts  were  captured  in the  loan Application and  Agreement  form  which were  duly  executed  by the Applicant/Claimant and the  2nd Respondent.

(iv)  That  it  resulted  to offsetting  the defaulted  amounts  against  the Applicant/Claimants after  it had  exploited all the  other  loan securities being  the  2nd Respondent’s  salary and her deposit savings.

ISSUES  FOR DETERMINATION

After  careful  reading  of the pleadings  filed  by all the  parties, the  following  are the  issues  for  consideration and determination

(i)     Whether  there was a  default  notice   issued to the Applicant/Claimants.

(ii)   Whether  the Applicant/Claimants  knew  the exact  loan  amounts  disbursed.

(iii)   Whether  the recovery  was procedural  and  lawful.

(iv)   Whether  the Applicants/ Claimants  knew  the loan  balances  at the time  of recovery.

Notice  issued  to the  Applicant/Claimants  and the above  questions  are very  crucial  in the determination  of this  Application. A notification  of default  is what  puts  the  guarantors  on notice  that the loan  they guaranteed  is not  performing  and that  the guarantor  is not  honouring  the terms  of the loan  agreement. In other  words, this is what  informs  of the status  of the loan  and serves  as a warning that  there is  a lurking danger  of recovery  of the  securities  offered  in this  case  deposits,  shares and  salaries.

In the  instant  case,  the Applicants/Claimants  are giving  contradictory  statements regarding  notice  of default  issued to them  by the  1st Respondent and  the exact  balances  outstanding.

Its  of note  to observe  that an admission  of receipt  of the said  notices  of default  is  expressly  made  vide  grounds  2 and 3  on the face  of the  Notice  of Motion. We note  the same  in extense  ground 2.

Ground  2:

That  on  15th September, 2020, the  1st  Respondent  vide   text  messages  unlawfully  and unprocedurally  issued  demand  to the  Applicants/Claimants  requiring  payments varying  from  Kshs.97,635/=to Kshs. 714,976/= from  each  applicant/claimant.

Ground  3:

That  the 1st  Respondent  in a series  of emails  dated  16. 6.2020 to  18. 6.2020 forwarded  to the  Applicant/Claimants  employer ……Kenya Limited  a check  off advise, which  highlighted  the amounts it  intended to deduct  from  the  salaries  of the  Applicants/Claimants monthly  from  the period  of October  2020 until  payment  in full.

The above  grounds  make an express  admission  of receipt  of  text  messages issued to demand payments of varying  amounts. The  second  ground admits  receipt of  emails which  highlighted  the amounts  the 1st  Respondent  intended to deduct.

However,  the Applicant/Claimants  erroneously describe  the text  messages  as unlawful and unprocedural  failing  to take  judicial  notice  of the new  mode of  litigation  which is  now  of universal  Application  in our  judiciary.  To  try to deny  this is  quite  worrying.

In the circumstances  therefore, through  the admission made  by the  Applicant/Claimants  of the receipt of default  notices  which  clearly  indicated  the outstanding  loan balances,  this Tribunal  concludes   that  the same  was  properly  served  and  that  the Applicant/Claimants  were  made  aware  of the full  status of the loan. Their  contention  must therefore  fail.

Regarding  whether  the Applicant/Claimants  knew  the exact  amount  of loan  disbursed, we  answer  this by  referring  the Applicant/Claimants to the loan  Application  and Agreement  form and personal  loan Application  and Agreement  Form  annexed  to  Replying  Affidavit  of 1st Respondent  effecting  the recovery  process  and  that  there  was ….unprocedural  or illegal  about it.  We agree with the  rebuttals in  the  Replying  Affidavit  of the 1st Respondent  that  all the  necessary  notices  were  served  and that  the recovery  process  was  done  the way  it was  to be done.

The final  matter  for consideration  is whether  the Applicants  have met  the threshold to be granted an injunction.

We are  guided  by the  old case  of Giella  -vs- Cassman Brown [1973]EA 358which  laid  down the  threshold  which must  be met  before  an injunction  is given:

(i)   Whether  there  is a prima facie  case  with  a probability  of success.

(ii)    Whether  the applicant   might suffer  irreparable  damage.

(iii)   Balance  of  convenience.

The above  threshold  was  buttressed  in the case  of  Mrao  Limited  - vs-  First American  Bank  of Kenya  Limited [2003]eKLR which in the said  forms, all  the Applicant/Claimants  appended  their  signatures  and the  same have  not been  challenged.

For instance,  the 1st  loan  guaranteed  was Kshs.5,700,000/= and the 2nd  one  was Kshs.830,000/= all totaling  to a guaranteed loan  of Kshs.6,530,000/= which  the 1st Respondent  sought   to recover.

It is therefore  in bad faith  that  the Applicant/Claimant  can plead ignorance  of such  glaring facts.

On this  ground, we  find that  the Applicant/Claimant  are  being  insincere  and therefore  they should  be discouraged  by  rejecting  their  assertion.

In whether  the recovery  was procedural  and lawful,  we have  already  made a finding  that the  1st  Respondent  issued the necessary  notices  through  SMS texts and emails notifying  the Applicants/Claimants of the  status  of the loan performance,  indicating  the amounts  to  be recovered  from  them  and these facts  have  been  admitted by the Applicants/Claimants.

We therefore  conclude  that  they followed  the procedure  in explained  further   what constitutes  a prima facie  case:

“ A prima facie case  is more  than  an arguable  case.  It is  not  sufficient  to raise  issues.  The evidence  must show  an infringement  of a right  and  the probability  of the applicant’s case  which  on the material  presented  to the   court,  a tribunal  properly  directing itself  will conclude  that there  exists  a right  has  apparently  been  infringed  by the  opposite  party  as to  call for  an explanation  or rebuttal  from the  later.”

From the  above  authorities , it is  settled  that for a party  to establish  a prima facie  case,  one must  demonstrate  the existence  which  has been  infringed  by the  opposite  party. That  right  should not  in  the imagination  of a litigant. It must  be demonstrable.

However,  the question  in the present  case  in whether  the Applicant/Claimants  have a prima face case and also  whether  they  have demonstrated  the infringement  of any  known  right  to warrant  protection  and redness  by way  of an  injunction.

The Applicant/Claimants Application  in majorly  premised  on the failure  of the 1st  Respondent to follow the laid  down  law  and procedure  in the recovery  process.

However,  although  the matter  of procedure and  legality  have been  addressed in the preceding  paragraphs  herein  above,  it is only  fair  to state  for the  avoidance  of doubt  that  the 1st  Respondent  has been  able  to demonstrate  and prove  through  its  Affidavit  and annextures  that  the process  of recovery  was properly  carried  out.

This has further been  fortified by  the admissions  made by  the Applicants/Claimants  in their pleadings. To this extent of admission,  there is no  prima facie  case  worthy  of consideration  by this  tribunal.

The Tribunal  therefore  opines  that since  there is  no prima facie  case with any  probability  of success on account  of admissions.  The Applicants/Claimants  stand  to suffer  no  irreparable  injury  and as a result,  the tribunal  is in  no doubt  to warrant  any decision  on the balance  of convenience.

In conclusion  therefore,  we find  as follows:

1.  That  the 2nd Respondent  applied  for a 1st loan  of  Kshs. 5,700,000/= and thereafter  a  second  loan  of Kshs.830,000/= which were  all guaranteed  by the  Applicants/Claimants. These  loans were  disbursed  on the strength of these  guarantees.

2. Thereafter, the  2nd Respondent  defaulted  in repayment  and  default notices  of intention  to recover  were issued  to the  Applicants/Claimants  electronically. The  same  were acknowledged  by the  Applicants/Claimants  and thereafter  recovery  was effected.

The attempt  by the Applicants/Claimants  to deny  the obvious neither  endears  them  to the  law  nor  to the facts  on records.

We have  carefully  read and  considered  all the  pleadings  by both  parties  including  their submissions  and come  to  the inevitable  conclusion  that  the Amended  Notice of Motion  dated  11. 2.2021 lacks merit  and therefore  the same  is hereby  dismissed with  costs  to the  1st  Respondent.

3.  Mention  for Pre-trial  directions  on 9. 11. 2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 2ND DAY OF SEPTEMBER, 2021.

HON. B. KIMEMIA CHAIRPERSON SIGNED 2. 9.2021

HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 2. 9.2021

MR. GITONGA KAMITI MEMBER SIGNED 2. 9.2021

MR. B. AKUSALA MEMBER SIGNED 2. 9.2021

TRIBUNAL CLERK R. LEWERI

NO APPEARANCE FOR CLAIMANT

LUMBE HOLDING BRIEF FOR MUNENE FOR RESPONDENT.

HON. B. KIMEMIA CHAIRPERSON SIGNED 2. 9.2021