Benson Irungu Mwaura v Sheria Co-operatives Savings & Credit Society of Kenya & 2 others [2020] eKLR Case Summary

Court
Co-operative Tribunal at Nairobi
Category
Civil
Judge(s)
Hon. B. Kimemia (Chairman), Hon. F. Terer (Deputy Chairman), P. Gichuki (Member)
Judgment Date
May 21, 2020
Country
Kenya
Document Type
PDF
Number of Pages
3
Explore the case summary of Benson Irungu Mwaura v Sheria Co-operatives Savings & Credit Society of Kenya & 2 others [2020] eKLR, highlighting key legal findings and implications for co-operative societies in Kenya.

Case Brief: Benson Irungu Mwaura v Sheria Co-operatives Savings & Credit Society of Kenya & 2 others [2020] eKLR

1. Case Information:
- Name of the Case: Benson Irungu Mwaura v. Sheria Co-operatives Savings and Credit Society of Kenya, Lucy Watiri Kamotho, and Susan Wambui Kamotho
- Case Number: Tribunal Case No. 739 of 2017
- Court: Co-operative Tribunal at Nairobi
- Date Delivered: May 21, 2020
- Category of Law: Civil
- Judge(s): Hon. B. Kimemia (Chairman), Hon. F. Terer (Deputy Chairman), P. Gichuki (Member)
- Country: Kenya

2. Questions Presented:
The court must resolve whether the claimant, Benson Irungu Mwaura, is entitled to recover a liquidated claim of Kshs.314,597.85, plus interest and damages, from the respondents, who allegedly used him as a guarantor without his knowledge or consent, and whether the first respondent acted within its rights in recovering the loan amount from the claimant.

3. Facts of the Case:
The claimant, Benson Irungu Mwaura, filed a claim against Sheria Co-operatives Savings and Credit Society (1st Respondent) and two sisters, Lucy Watiri Kamotho (2nd Respondent) and Susan Wambui Kamotho (3rd Respondent). The claimant alleged that money was deducted from his account by the 1st Respondent because he was purportedly a guarantor for a loan taken by the 3rd Respondent on behalf of the 2nd Respondent, which he did not consent to. The 3rd Respondent was an employee of the 1st Respondent and allegedly facilitated the loan application without the claimant's knowledge.

4. Procedural History:
The claimant filed the original statement of claim on November 24, 2017, seeking recovery of the loan amount and damages. The 1st Respondent filed its defense on February 5, 2018, asserting that the claimant was aware he was a guarantor. The 2nd and 3rd Respondents also filed defenses, with the 2nd Respondent denying any fraud and stating that the claimant was indeed a guarantor. The matter proceeded to a hearing where evidence from all parties was presented, followed by written submissions from the claimant and the 1st Respondent.

5. Analysis:
- Rules: The court considered the obligations of a guarantor under contract law, particularly regarding the liability of guarantors for defaulted loans.
- Case Law: The court referenced relevant statutes and previous cases that establish the principles governing guarantor liability and the conditions under which a guarantor may be held responsible for another's debt.
- Application: The court found that there was collusion between the 2nd and 3rd Respondents to obtain the loan using the claimant's name as a guarantor without his knowledge. The 1st Respondent acted within its rights to recover the defaulted amount from the claimant, who was legally bound as a guarantor. The court concluded that the 2nd and 3rd Respondents were jointly and severally liable to pay the claimant the amount owed.

6. Conclusion:
The court ruled in favor of the claimant against the 2nd and 3rd Respondents, ordering them to pay Kshs.314,597.85 plus costs and interest. The suit against the 1st Respondent was dismissed, affirming that the society acted lawfully in recovering the loan amount from the claimant.

7. Dissent:
There were no dissenting opinions noted in this case.

8. Summary:
The Co-operative Tribunal ruled that the 2nd and 3rd Respondents were liable for the loan amount taken out without the claimant's consent, while the 1st Respondent was not liable for the recovery actions it took against the claimant. This case underscores the legal principles surrounding guarantor liability and the importance of consent in financial agreements. The decision serves as a precedent for similar disputes involving unauthorized guarantees in loan agreements.

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