1. The Plaintiff is a cooperative society registered under the Cooperative Societies Act, Cap. 490 Laws of Kenya, Registration Certificate No. CS/7208 on 30th June 1994. It drew its membership from the employees of the 4th Defendant, a hotel run by the 1st, 2nd 3rd and 5th Defendants at all material times to the suit. The 2nd, 3rd and 5th Defendants were its directors. The Interested Party is a company incorporated and registered in Kenya under the provisions of the Companies Act, Cap. 486 Laws of Kenya. Vide its plaint dated 17th June 2021, the Plaintiff sued the defendants seeking the following reliefs:
i. An order compelling the 5th Defendant to appear before the Honorable Court and show cause why he should not furnish security for the decree that may be passed against the Defendants;
ii. A warrant of arrest to issue against the 2nd and 3rd Defendants to show cause why they should not furnish security for full payment of the principal sum of Kshs. 14,233,542.70 and Kshs. 28,519,819.70 being compound interest on the principal sum at 7% per month totaling Kshs. 42,753,362.40 and their appearance in court;
iii. A mandatory injunction to compel the 1st–5th Defendants to remit to the Plaintiff a principal sum of Kshs. 14,233,542.70, being deductions made on the Plaintiff’s membership for the period of January 2018 to March 2020 and all other subsequent deductions;
iv. A mandatory injunction to compel the 1st–5th Defendants to remit Kshs. 28,519,819.70 to the Plaintiff being compound interest on the principal sum at the rate of 7% per month accruing from January 2018 to March 2020;
v. Compound interest to apply to all the sum due at the rate of 7% per month from January 2018 until payment in full pursuant to section 35 of the Cooperative Societies Act, Laws of Kenya;
vi. An order of permanent injunction to prohibit the defendants, the agents, servants, employees, advocates or any other person or entity claiming proprietary interest whatsoever through the defendants from leasing/charging/selling/alienating/wasting or otherwise dealing with land reference number 209/9514;
vii. An order of permanent injunction to prohibit the defendants, their servants or agents or employees or advocates or otherwise howsoever from removing, transferring, disposing or charging or in any manner interfering with any of the defendants’ assets whatsoever, including land, shares and monies deposited in their accounts and held in all and any banks operating in Kenya and from the jurisdiction of this court;
viii. General damages;
ix. Costs of this claim together with interest;
x. Any other relief that this Honorable Court may deem fit.
2. The Plaint was accompanied by a Verifying Affidavit sworn by one Joseph Kibagendi, the Vice-chairman of the Plaintiff. Mr. Kibagendi also filed a witness statement dated 17th June, 2021. Together with the Plaint, the Plaintiff also filed a Notice of Motion application dated the 17th of June 2021, under certificate of urgency, in which it sought the following orders:
i. ….
ii. THAT pending the hearing of this Application and suit herein, summons do issue to the 5th Defendant to appear before the Honorable Court and show cause why he should not furnish security for the decree that may be passed against the Defendants;
iii. THAT pending the hearing of this Application and suit a warrant of arrest do issue against the 2nd and 3rd Defendants to show cause why they should not furnish security for full payment of the principal sum of Kshs. 14,233,542.70 and Kshs. 28,519,819.70 being compound interest on the principal sum at 7% per month totaling Kshs. 42,753,362.40 and their appearance in court;
iv. THAT pending the hearing of this Application and suit a temporary injunction do issue restraining the defendants whether by themselves, agents, servants, employees, advocates or any other person or entity claiming proprietary interest whatsoever through the defendants from leasing/charging/selling/alienating/wasting or otherwise dealing with land reference number 209/9514;
v. THAT pending the hearing of this Application and suit temporary injunction restraining the defendants whether by their servants or agents or employees or advocates or otherwise howsoever from removing, transferring, disposing or charging or in any manner interfering with any of the defendants’ assets whatsoever, including land, shares and monies deposited in their accounts and held in all and any banks operating in Kenya and from the jurisdiction of this court;
3. The Notice of motion application was heard and determined in a Ruling delivered on 15th March 2022 in the following terms:
i. THAT the Notice of Motion dated 17th June 2021 is hereby dismissed for lack of merit.
ii. THAT costs shall follow the outcome of the main suit.
iii. THAT the Defendants/respondents are hereby ordered to pay to the Plaintiff the Principal sum of Kshs. Fourteen Million Two Hundred and Thirty Three Thousand Five Hundred and Forty Two and Seventy cents (Kshs. 14, 233, 542/70) within thirty (30) days hereof.
4. The key outcome of the Ruling delivered on 15th March 2022 was that the principal sum claimed in the Plaint was paid to the Plaintiff. Therefore, the remaining issue in the substantive Plaint, which forms the core of this judgment is the determination of the interest sought.
parties’ submissions before court
5. This matter was heard on 24th June 2024 and 10th July 2024. Outrightly, all parties adopted their pleadings and witness’s statements on record.
6. The plaintiff, through, PW1 JOSEPH KIBAGENDI, stated that its members were at all material times to the suit working for gain at the 4th defendant hotel, run by the 1st, 2nd, 3rd and 5th defendants. That the defendants were mandated and obligated to remit monthly SACCO deductions from their employees, members of the plaintiff, to the plaintiff. He stated that the defendants honored that obligation until December 2017 when they (members of the plaintiff, and employees of the defendants) discovered that the defendants had not been submitting their deductions to the plaintiff for the period from January 2018 to March 2020 to the tune of Kshs. 14,233,542.70.
7. He confirmed to the Court that the sums of Kshs. 14, 233, 542.70, were ultimately remitted to the plaintiff pursuant to a court order dated 15th March 2022. PW1 stated that the money was used to pay back shares and the loan taken from the Interested Party. However, according to PW1, members of the plaintiff were yet to receive their entire sums.
8. The Plaintiff claims interest and penalty in the sum of Kshs. 28,519,819.00 which was 7% of the principal sum up to May 2021. Part of the basis of this relief is that a loan had been obtained by the Plaintiff from the Interested Party and the Plaintiff defaulted in payment. The Plaintiff attributed this default to the Defendants’ failure to remit their monthly deductions. This information was at the defendants’ disposal, as testified by PW1, as they were part of the negotiation team on repayment. It was submitted that following this default, the Plaintiff was sued by the Interested Party where as at December 2020, it owed the Interested Party the sum of Kshs. 34,383,718.00. PW1 testified that the Plaintiff subsequently reported this issue to the Commissioner of Cooperatives.
9. Regarding the Defendants’ claim that their accounts were frozen, it was submitted that those concerns were not known or communicated to the Plaintiff. PW1 stated that he recalled that all along until 2018, the Plaintiff faced no issues with the Defendants’ SACCO deductions from the employees’ salaries. He confirmed that the Plaintiff was still operational as at the time of his testimony before this Court and urged this Court to grant the reliefs sought in order to finally wind up the Plaintiff. He however added that the 4th defendant was closed down and everyone dispatched. Furthermore, the plaintiff was yet to conduct a general meeting explaining that it was proving arduous to have members convened.
10. DW1, Jamal Ahmed, stated that he was the caretaker of the 4th defendant. He confirmed that the 2nd, 3rd and 5th defendants were former directors of the 4th defendant. He relied on the CR12 produced in evidence revealing that they are no longer directors. He stated that according to his understanding of the Plaintiff’s by-laws, the Plaintiff existed by dint of the status of employment of its members working for the Defendants. That since they resigned or retired from the 4th Defendant, the plaintiff ceased to be in existence by effluxion of employment.
11. He submitted that the Defendants were under no obligation to remit the employees’ contributions to the Plaintiff as there was no agreement between the Defendants and the Plaintiff. However, that it was the Defendant’s employees and members of the plaintiff who requested the 4th defendant to remit monthly deductions from the salaries towards their SACCO contributions.
12. DW1 stated that he recalled that in 2011, civil war broke in Libya and the United Nations Security Council imposed sanctions against its citizens including the Defendants. That this crippled the 4th Defendant’s operations causing financial strain. In addition, that their accounts held in Ecobank and SBM Bank were closed. Dw1 also recalled that their assets were frozen thereby inhibiting their ability to transact. He remembered that the 1st Defendant management offered to pay the outstanding SACCO money to the plaintiff following a series of meetings. However, that proposal was ultimately declined.
13. DW1 did not dispute the principal sum of Kshs. 14,233,542.70 saying that it is on this basis that the same was settled pursuant to the court order dated 15th March 2022. His evidence was that they wanted to pay those sums but were crippled by a disagreement on the payment of the remittances for several months in the years 2019 and 2020.
14. Notably, DW1 could not confirm if and when the 4th Defendant had been closed down but testified that as at March 2020, it was not operational. He acknowledged that the plaintiff had a genuine claim but failed to appreciate the difficulties the Defendants faced. That the Defendants’ business collapsed by way of force majeure. Furthermore, the effects of COVID-19 affected the 4th Defendant’s running business operations forcing a countrywide suspension. He denied receiving letters from the ministry.
15. The Interested Party’s case was urged through Patricia Mathui, its Credit Control Manager. She adopted her witness statement dated 8th July 2024 and list and bundle of documents dated 27th April 2023 as her evidence in chief. She confirmed that the Plaintiff took a loan from the Interested Party in October 2017 to the tune of Kshs. 35,000,000.00. Upon review and approval, the Interested Party advanced the sum of Kshs. 30,000,000.00 to the Plaintiff, to be repaid in 36 monthly installments. She stated that the Plaintiff was inconsistent in the payment of the loan. Following its default, the Interested Party demanded the Plaintiff to settle the sums including the following additional terms: accrued interest at a rate of 1.17% monthly and a default penalty of 6% per annum until payment in full. She could only recall that the Plaintiff paid Kshs. 500,000.00 after be paid the Kshs. 14,000,000.00.
16. She stated that though not statement was filed, the Plaintiff owed the Interested Party a sum of Kshs. 46,238,441.00 as a result of penalties as at 31st April 2024. It was her testimony that since the Plaintiff blamed the Defendants for their failure to honor their loan obligations, in the circumstances, the Defendants ought to be condemned to pay the Plaintiff in order to settle their loan amount with the Interested Party.
PARTIES’ WRITTEN SUBMISSIONS
(a) Plaintiff’s submissions
17. At the close of the hearing, parties elected to file written submissions. In its Written Submissions dated 29th August 2024, the Plaintiff framed three issues for determination: whether the suit was properly filed; whether the Defendants are statutory obliged to pay interest on withheld deductions due to the Plaintiff, Cooperative Society; and whether the Plaintiff is entitled to general damages for loss and damage suffered following the defendant’s failure to remit deductions made on the emoluments of the Plaintiff’s membership.
18. On the first issue, the Plaintiff argued that the suit was properly instituted. It argued that the by-laws relied on by the Defendants could not be authenticated as belonging to the Plaintiff by dint of section 11 (4) of the Cooperative Societies Act. Further, it was submitted that it was incorrect for the Defendants to state that since the members of the Plaintiff resigned or left employment of the Defendants, the Plaintiff ceased to exist. That, it was a body corporate with perpetual succession on the strength of section 12 of the Cooperative Societies Act.
19. On the second issue, it was submitted that the Defendants were statutorily obligated to pay interest on withheld deductions due to the Plaintiff. Reliance was placed on the provisions of section 35 (1) of the Cooperative Societies Act. It submitted that since the defendants failed to remit their SACCO deductions between the period January 2018 to March 2020 as evidenced in the summary of deductions made by it, they were obligated to pay compound interest at the rate of 7% on those withheld remittances and the said interest as at 15th May 2021 totaled Kshs. 28,519,819.70. That this submission was further aggrandized by the Commissioner’s letters dated 18th July 2019 and 20th January 2021 and those of the Nairobi City County Cooperative Development Department dated 21st May 2020 and 4th September 2020 addressed to the Defendants.
20. The Plaintiff submitted that the Defendants defence was not backed by any cogent evidence. With reference to the letters notifying the Defendants of its bank account closures, the plaintiff paid close attention to the letters from KCB and Barclays Bank dated 20th April 2011 and 24th June 2011 respectively and submitted that those letters were before the fact and did not affect the present dispute and ought to be disregarded. As regards the letter dated 15th March 2021 from SBM, the plaintiff interpreted that the same was a clear demonstration of liquidity on the part of the Defendants and as such, it was a fallacy for the defendants to argue that they had no access to their bank accounts. That in any event, the Defendants honored the court order dated 15th March 2022 by remitting to the Plaintiff the sum of Kshs. 14,233,542.70.
21. Lastly, on the third issue, the Plaintiff submitted that it was entitled to general damages for loss and damage following the Defendants failure to remit SACCO deductions. It argued that it had suffered massive distress on the interest and penalties accrued from the loan taken from the Interested Party, which as at 30th April 2024, stood at Kshs. 46,238,441.00 and continues to accrue. Further, that the failure to remit the funds crippled its operational functions. It thus sought general damages equivalent to the withheld deductions of Kshs. 14,233,542.70.
(b) Defendants’ submissions
22. The defendants filed their joint written submissions dated 13th September 2024 in which they delimited the following issues: whether the Plaintiff is authorised to file this suit; whether the Defendants are statutorily obliged to pay interest on withheld deductions due to the Plaintiff; and whether the Defendants are bound by contractual agreement between the Plaintiffs and the Interested Party.
23. On the first issue, it was submitted that the purported officials did not have capacity to sue and had not been sanctioned by its members pursuant to an annual general meeting or special general meeting. That PW1’s evidence in cross examination was contradictory to his evidence before the court in a previous matter, Owuor vs Regency Sacco Society Limited (Tribunal case 743 of 2019)2024) KECPT (KLR) 30 May 2024, in which case PW1 had stated that he was no longer an official of the Plaintiff. Further, it was contended that the Authority to Act had only been executed by the chairman and treasurer without disclosing the names of those officials. It could not thus be relied upon. They argued that since PW1 stated that no elections were held after 2015, he was not lawfully in office as his term was to last three years. They added that since its members’ employments were terminated from the Defendants, then the Plaintiff did not exist and for those reasons, it had no capacity to sue.
24. Turning to whether they were obligated to settle the interest on the withheld deductions, the Defendants submitted that they were not as the plaintiff lacked locus standi to institute claim by virtue of section 35 of the Cooperative Societies Act. That as the provision spoke of individual membership, the members could not donate that right to the Plaintiff. Further, it was urged that the claim amounting to Kshs. 28,519,819.70 was not substantiated by any documentary evidence as to justify its award. They posited that the Plaintiff ought to have drawn a list of its members and presented that document before this court. In its absence, that claim could not stand. That no agreement between the Plaintiff and Defendants existed and, in any event, the defendant pleaded force majeure.
25. The Defendants also challenged the jurisdiction of this Court to hear this dispute. Citing section 76 (1) and (2) of the Cooperative Societies Act, they submitted that the dispute ought to have been filed before the Cooperative Tribunal. That it would be a miscarriage of justice for the Court to award interest or any other reliefs since jurisdiction was questioned. That the Plaintiff ought to have explored the dispute resolution mechanism provided by law and in the circumstances, it unjustly breached the doctrine of exhaustion.
26. On the final issue, whether the Defendants were bound by the contractual agreement entered between the Plaintiff and the Interested Party, they submitted that the loan was taken by the Plaintiff members from the Interested Party. That it therefore did not concern the Defendants. In their view, the claim for interest was based on the loan amount when the doctrine of privity of contract postulates that an obligation cannot be imposed on a party not party to the contract.
27. For those reasons, the Defendants urged this Court to dismiss the suit with costs.
(c) The Interested Party’s submissions
28. The Interested Party filed its brief written submissions dated 25th October 2024. Submitting on whether it had an interest in the suit, it relied on PW1’s testimony admitting that the Plaintiff owed it money pursuant to an unpaid loan that continued to accrue interest. That it was therefore in the Interested Party’s interest that judgment be entered in favor of the Plaintiff against the Defendants in order that it may recover the principal sum and interest. It however urged that this Court gives a directive that the Plaintiff pay the Interested Party directly from the money paid by the Defendant.
ANALYSIS AND DETERMINATION
29. Having considered the pleadings and the evidence of the parties, examined their respective written submissions and analyzed the law, the following issues fall for determination:
(i) Whether this Court has the jurisdiction to entertain this matter;
(ii) Whether the Defendants are obligated to meet the interest on unremitted deductions, and how much if the answer is in the affirmative?
(iii) Whether the Court should order the Plaintiff to pay the Interested Party as prayed; and
(iv) Whether the Plaintiff is entitled to general damages.
Whether this court lacked jurisdiction to entertain this matter
30. The jurisdiction of this Court to determine this matter was question by the Defendants. First, it was contended that pursuant to section 76 (1) and (2) of the Cooperative Societies Act, the dispute ought to have been filed before the Cooperative Tribunal. That the Plaintiff ought to have explored the dispute resolution mechanism provided by law and hence, breached the doctrine of exhaustion.
31. This Court notes that this issue of lack of exhaustion of alternative dispute resolution mechanism was only raised at submissions stage. It was not raised in their Statement of Defence. It is trite law that submissions are not pleadings and all issues a party needs determined by court are to be included in pleadings and only elaborated in submissions. On that basis alone, I would dismiss this issue as being improperly raised.
32. Notwithstanding the above, it is peculiar that the Defendants elected to make this submission after complying with the court order issued on 15th March 2022. Further, when DW1 testified before the Court, he never addressed this issue. If the Defendants genuinely believed that this Court ought to pave way for alternative forms of dispute resolution, why did they comply with the orders of the court let alone not submit on jurisdiction at that juncture? Further, what is the import of this court determining that it has no jurisdiction, will the payment of the sum paid pursuant to the ruling of 15th March 2022 be resinded?
33. Consequently, I find this submission not only an afterthought and elusive but also, the determination of the question of applicability of the doctrine of exhaustion in so far as the facts and circumstances herein are concerned, will stifle the justice of this matter. I find that this court is properly vested with jurisdiction taking into account the orders that were already complied with.
34. Aside from lack of adherence to the doctrine of exhaustion, this Court’s jurisdiction was also challenged on the basis of the Plaintiff’s locus standi to sue. Again, on similar reasons of a ruling having been delivered which the Defendants fully complied with by paying a substantive amount of money, this Court will not in the interest of justice consider that issue. Indeed, if there is a matter in which the Court ought to invoke the doctrine of avoidance, this is it.
35. I hasten to add that in invoking the doctrine of avoidance, the court is in no way abdicating its duty. When parties appeared before this Court to make oral submissions, it was common ground that the issue of the principal amount had been settled and what was coming up for determination was ONLY the question of interest. With this background, I do not find it prudent to reopen the matter interrogating the question of capacity to sue. Notably, before the Court DW1 acknowledge that the sum of Kshs. 14,233,542.70 was due to the Plaintiff and was paid.
36. Consequently, I find that this matter is rightfully before this court and the Court has jurisdiction.
Whether the defendant was obligated to meet the interest on unremitted deductions and how much if the answer is in the affirmative?
37. This is the crux of the dispute before this Court. The Plaintiff was emphatic that the Defendants were obligated by law to pay interest since they failed to remit SACCO deductions for the period from January 2018 to March 2020. They sought to justify the relief of interest on the fact that they had defaulted in the settlement of a loan taken from the Interested Party. The Defendants maintained that they were not obligated to pay.
38. PW1’s evidence was that during the pendency of their members’ employment, the Defendants remitted a portion of their salaries to the Plaintiff. That fact is not denied by the Defendants who stated that though it was not within their realm, the Plaintiff members approached them to remit those deductions. In fact, DW1 continued that owing to events beyond the Defendants’ control, those sums could not be remitted between the period January 2018 to March 2020; the sum totaling Kshs. 14,233,542.70. Suffices it to say that the obligation to remit and the failure to remit is not denied. What is contested is the reason for failure to remit. Equally not contested is the fact that the deductions from members were regularly done by the Defendants.
39. In defence, DW1 stated that in 2011, civil war broke in Libya and the United Nations Security Council imposed sanctions against its citizens including the defendants. That this caused the 4th Defendant to suffer financial constraints and in addition, their accounts held in Ecobank and SBM Bank had been closed and assets frozen thereby inhibiting their ability to transact. He remembered that the 1st Defendant’s management offered to pay the outstanding SACCO money to the plaintiff following a series of meetings but that offer that was ultimately declined. It is on the strength of that admission that the court ordered the Defendants to settle those sums to the favor of the Plaintiff in its order dated 15th March 2022.
40. The Plaintiff now claims interest and penalty in the sum of Kshs. 28,519,819.00, being 7% compounded interest on the principal sum up to May 2021. The Plaintiff further justified that claim on account of the fact that a loan had been obtained by the Plaintiff from the Interested Party and it defaulted in its payment. That following this default, the Plaintiff was sued by the Interested Party, where as at December 2020, the arrears stood at Kshs. 34,383,718.00.
41. The Plaintiff invoked section 35 (1) of the Cooperative Societies Act which provides as follows:
“Where an employer of a person who is a member of a co-operative society has, under the instructions of the employee, made a deduction from the employee's emoluments for remittance to the co-operative society concerned but fails to remit the deductions within seven days after the date upon which the deduction was made, the employer shall be liable to pay the sum deducted together with compound interest thereon at a rate of not less than five percent per month.”
42. In support of its claim for interest, the Plaintiff produced in evidence the following: a letter dated 18th July 2019, by the Commissioner of Cooperatives addressed the 4th Defendant demanding the sum of Kshs. 13,509,996.30 accounting for the total deductions, for the period May 2018 to June 2019, the 4th defendant ought to have paid to the plaintiff from the employee’s emoluments on behalf of the plaintiff. Secondly, a letter dated 21st May 2020, by Nairobi City County Cooperative Development Department written to the 4th Defendant. The letter made reference to a meeting held on 14th May 2020 in which the Defendant’s Human Resource Consultants and Management were present. It was inter alia disclosed that the 4th Defendant had requested that the interest penalty of 7% claimed by the Plaintiff be discounted to accommodate the tough economic times the 4th Defendant was grappling with. The letter sought to clarify the position in the matter in order to update the Commissioner.
43. Later, the said Department wrote a letter dated 4th September 2020 demanding that the 4th Defendant does settle the sum of Kshs. 32,673,682.16 comprising the payments for the principal sums and penalties thereof. Finally, invoking section 35 of the Act, the Commissioner demanded a sum of Kshs. 38,767,970.45 from the 4th Defendant.
44. In response, the Defendants stated before this Court that since membership was individual in nature, then the Plaintiff could not claim the sum on behalf of its members. In my considered view, that assertion does not suffice. It is not lost and/or disputed in this matter that the sum of Kshs. 14,233,542.70. on which interest is sought were direct deductions from individual members of the Plaintiff who were employees of the Defendants. The Plaintiff holds the interest of its members and was therefore entitled to claim on their behalf. The defendants posited that a list of the Plaintiff’s members ought to have been availed. A perusal of the documents before Court reveals that indeed a list was attached in the Plaintiff’s Bundle of Documents dated 8th November 2022 disclosing that as at March 2020, members of the Plaintiff were 176 in number.
45. It thus follows that having deducted and failed to remit members contributions as required, the Defendants are liable to pay the interest thereto as decreed by section 35(1) of the Cooperative Societies Act.
46. While DW1 pleaded force majeure and frustrations from its banks where it was depositing and withdrawing funds, I find that those arguments are vitiated by the fact that this information was not disclosed to the Plaintiff. The span of time from January 2018 until March 2020, a period of over 2 years, is such a long period of time that cannot suffice one alleging an act of God (force majuere). It was sufficient time within which the Defendants would have noted the hiccups they were facing and brought them to the attention of the Plaintiff and or its employees. It is worth-noting that while they claim difficult in remitting, they kept on deducting members of the Plaintiff.
47. I reiterate that Section 35 (1) of the Act is clear and in no uncertain terms that where an employer fails to remit deductions as instructed by its employees to a SACCO, within seven days after they fell due, it shall be liable to pay the sum together with compound interest at the rate of not less than 5% per month. The Plaintiff sought a compound interest rate of 7%. Notably, the Defendants did not in anywhere challenge the rate of 7%. Their case was that the Plaintiff are not entitled to the interest. The Act gives a minimum of 5% leaving the upper limit to the discretion of the decision-maker, in this case, this Court. The Plaintiff has produced before this Court documents supporting its claim of 7% interest. As already noted in the preceding paragraphs, at one point the Defendants had acceded to the 7% interest and sought it discounted. Consequently, I find merit in the Plaintiff’s plea for interest as prayed and allow the same.
Whether the Court should order the Plaintiff to pay the Interested Party as prayed
48. The Interested Party sought a directive from the Court that the Plaintiff do off set its loan obligation owed to it directly from the interest sum sought in this matter. A perusal of their submissions before this Court reveals that this could be the sole reason why they are supporting the Plaintiff’s claim for interest in this matter.
49. It is worth noting that save for its written submissions, the Court has not seen any pleading filed by the Interested Party. In their submissions, they stated that “the Interested Party then entered an appearance on 15th July 2021 as they had loaned an amount to the Plaintiff and they also wanted to recover the sums advanced to Regency Co-operative Sacco…”. Save for that statement, there is no evidence that the Interested Party filed any substantive pleading asserting its claim as against the Plaintiff either by way of a counter-claim, a set off or any application.
50. Consequently, mindful that the single issue argued by parties before the Court was whether the Plaintiff was entitled to the sought interest and whether the Defendants were liable to pay the same, a directive to the Plaintiff to pay the Interested Party, or even on how to expend the sum interest once receipted from the Defendants is unfounded in law. The Interested Party’s plea before this Court is therefore dismissed with no orders as to costs.
Whether the plaintiff is entitled to general damages?
51. The Plaintiff sought general damages on account of the Defendants’ breach. This court in Kenya Women Microfinance Ltd vs. Martha Wangari Kamau [2021] eKLR held as follows regarding general damages where there is a breach of contract:
“In Dharamshi v Karsan [1974] EA 41, it was held that general damages are not awardable for breach of contract in addition to the quantified damages as it would amount to a duplication. And Securicor Courier (K) Ltd v Benson David Onyango & another [2008] eKLR, the Court of Appeal reiterated that general damages are not awardable for breach of contract. (See also Provincial Insurance Co. EA Ltd v Mordechai Mwanga Nandwa, (KSM Civil Appeal No 179 of 1995).”
52. This Court takes the same approach. General damages are not awardable for a breach of contract. The principal sum of deductions not remitted was paid pursuant to the Court ruling of 15th March 2022. The sanction for that breach is the remedy of interest provided in section 35(1) of the Act, which remedy, the Plaintiff has been awarded by the Court. Consequently, it is my finding that an order for the award of general damages will amount to double remedy/compensation. Consequently, that prayer fails.
53. The upshot of the above findings is that the Plaintiff’s claim succeeds in the following terms:
a. The Defendants shall jointly remit the sum of Kshs. 28,519,819.70 to the Plaintiff being compound interest on the principal sum at the rate of 7% per month accruing from January 2018 to March 2020;
b. The Plaintiff shall have costs of this suit;
c. The Plaintiff shall be awarded interest on (a) above at court rates from the date of judgment until payment in full and interest on (b) above at court rates from the date of judgment until payment in full.
d. The Interested Party’s plea before this Court is therefore dismissed with no orders as to costs