[2020] KECPT 72 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 596 OF 2019

AINABKOI INVESTMENT CO-OPERATIVE

SOCIETY LIMITED........................................................................................CLAIMANT

VERSUS

AINABKOI FARMERS SAVINGS & CREDIT CO-OP.

SOCIETY LIMITED............................................................................1ST RESPONDENT

COUNTY GOVERNMENT OF UASIN GISHU...............................2ND RESPONDENT

RULING

Vide the Application dated 21/5/2020, the Claimant has moved this Tribunal seeking for the order inter alia:

1. THAT service of this Application be dispensed with in the first instance;

2. THAT an injunction do issue against the 1st Respondent to restrain it whether by itself, its servants and/or agents from continuing to offer for sale shares of the Claimant to the public and selling, selling and/or interfering with the management and ownership of the Claimant’s property known as Silver Hotel at Kihuga Square in Eldoret West, Mushroom Hostel and Ainabkoi Filing Station pending the hearing and determination of this Application in the first instance and thereafter pending the hearing and determination of this claim; and

3. THAT the costs of this motion be provided for.

The Application is supported by the grounds on its face and the Affidavit sworn by Benjamin Chemjor on even date.

The 1st Respondent has opposed the Application by filing statement of grounds of opposition dated 8/6/2020 and a Replying Affidavit sworn by Nathaniel Kibet Chepkenor on even date.

Claimant’s Contention

Vide the instant Application the Claimant contend that the 1st Respondent has breached the terms of the Memorandum of Understanding entered between themselves on 26/5/2015 as follows;

a. Offering for sale the Claimant’s shares to the public; and

b. Forcefully taking over the management of Silver and Mushroom hotels.

That pursuant to the directive of the Sacco Regulatory Authority , the assets and investments of the 1st Respondent were to be transferred to the Claimant. That in particular, that assets which stood transferred were;

a. Silver Hotel;

b. Mushroom Hostel; and

c. Ainapkoi filling Station.

That pursuant to the Memorandum, the Claimant sought to assume full ownership of the said assets. That in doing so, a meeting of a technical committee was convened on 2/9/19 – 4/9/16. That during the said meeting, parties failed to agree on the full realization of the Memorandum. That the 1st Respondent caused to be prepared a report which stipulated that the Claimant was required to pay Kshs. 39,871,174 in order for it to acquire full interest in the investment. That the Claimant disputed the said sums of money for reasons specifically stated at paragraph 9 of the Supporting Affidavit of Benjamin Chenjor. That in the circumstance, the Claimant wants the Orders sought to be granted.

Respondent’s Case

The 1st Respondent has opposed the Application on the following grounds. That the deponent of Affidavit in support of the Application lacks the requisite authority to institute the suit as there is no Board Resolution of the Claimant sanctioning the same.

That the 1st Respondent was and is still the owner of the suit properties. That whilst the Memorandum of Understanding referred to by the Claimant was to facilitate the transfer of the said assets to the Claimant, the Claimant did not honour its obligations within the stipulated period and thus lost its claim over the said properties. That the Claimant did not pay the 1st Respondent the amount owed yet the same was a condition precedent to transfer of the assets.

That consequently, on 12/4/2016, SASRA advised that the non-core activities of the 1st Respondent i.e the hotel and hostel should not be transferred to the Claimant until full repayment for the two properties was done. That it did not cause a report to be prepared calling for the payment of Kshs. 39,871,174 by the Claimant before transfer of the assets.

That in the circumstances, the Claimant has not established the pre-requisites for the grant of a temporary injunction.

Disposal of the Application

Vide the directions given on 9/6/2020, the Application was disposed of by way of written submissions. The Claimant filed its Submissions on 16/6/2020 while the Respondent did so on 29/6/2020. We will consider the said submissions when determining the issues in controversy in the Application.

Issues for determination

We have framed the following issues for determination;

a. Whether the Claimant has established a proper basis for the grant of a temporary injunction; and

b. Who should meet the costs of the Application.

Temporary Injunction

It is common ground by both parties that for one to succeed in an Application for the grant of a temporary injunction, one has to satisfy the conditions set out on the case of Giella –vs- Cassman Brown & Co.Ltd [1973] E.A. 358 namely;

a. Aprima facie casewith a probability of success;

b. Irreparable harm; and

c. Balance of convenience.

The above principles were underscored by the court in the case of Robert Mugo Wa Karanja –vs- Ecobank(Kenya)Ltd & Another [2019]eKLR as follows;

“ The condition further in granting an injunction is now well settled in the case of Geilla –vs- Cassman Brown Company Limited (1973) E.A 358 where the court expressed itself on the conditions that a party must satisfy for the court to grant an interlocutory injunction”.

“ First, an Applicant must show a prima facie case with a probability of success . Secondly, an interlocutory injunction will not normally be granted unless the Applicant might otherwise suffer irreparably injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide on Application on a balance of convenience.”

The court went further to held thus;

“ The test for granting an interlocutory injunction were considered in the American cynamid Co. –vs- Ethilon Limited (1975) A. AER 504 where three elements were noted to be of great importance namely”.

i. There must be a serious for issue to be tried;

ii. Damage are not an adequate remedy; and

iii. The balance of convenience lies in favour of granting or refusing the Application.

Prima Facie Case

The court in the case of Nguruman Limited –vs- Jan Bonde Nelson & 2 Others [2014] eKLR defined a prima facie case to mean;

“ a case in which on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party to call for an explanation or a rebuttal from the latter”.

Flowing from this definition the question arises as to whether the Claimant in the instant Application has established existence of a right which has been infringed by the Respondent to warrant the 1st Respondent to make a rebuttal. To satisfactorily answer this question we will revert to the material presented to us. It is the Claimant’s case that pursuant to the directives of Sasra requiring Sacco to register separate legal entities to be responsible for the management and running of their investments, the 1st Respondent entered into a Memorandum of Understanding with itself dated 25/5/2015. The said Memorandum has been annexed and marked as annexture A in the Affidavit in support of the Application sworn by Benjamin Chenjor.

That vide the said Memorandum, the assets of the 1stRespondent, namely, Silver Hotels, Mushroom Hostels and Ainapkoi Filing Station were transferred to the Claimant.

That the full ownership of Silver Hotel and Mushroom Hostels would be realized on payment in full, of Kshs. 17,325,000. That the Claimant was to embark on an aggressive campaign to make every member of both parties to contribute Ksh. 10,000.

That pursuant to the said Memorandum, the Claimant sought to assume full ownership of the assets aforesaid. That it is on this basis that a meeting of a technical committee was convened on 2/9/2019 – 4/9/2019. That parties failed to agree on the full realization of the Memorandum in the said meeting. That the 1st Respondent unilaterally caused to be prepared a report that the Claimant was required to pay Kshs. 39,871,174 in order for it to acquire full interest in the assets. That the Claimant disputed the said sum.

On its part, the 1st Respondent contend that the assets in question belong to itself and that whilst it was envisaged in the Memorandum of Understanding that the Claimant would gain ownership of the investments, it failed to abide by the terms of the said Memorandum by not up the making the requisite payment. That when this became the case, Sasra, vide a letter dated 12/4/2016, advised that, the non-core activities in the hotel and hostel to remain with the 1st Respondent until the Claimant fully paid for them.

We have perused the said memorandum understanding.

Article 4 thereof provide thus;

“ The full ownership of Silver Hotel and Hostels, by the 2nd party (Ainabkoi Investments Co-operative Society Limited) shall be realized on payment in full of Ksh. 17,325,000 ( Kenya Shillings Seventeen Million, Three Hundred and Twenty Five Thousand) being money owed by the Hotel”.

Determination

We have also perused the minutes of the technical committee produced by the 1st Respondent and marked as annexture NKL -3”- KU note that the Claimant had three representatives, namely; Benjamin Chomo, Joseph TomandNelson Kutol.

The said meeting established that the total outstanding amounts owed by the Claimant to the 1st Respondent Kshs. 39,871,174.

What we gather from the material before us is that as it stands, the Claimant has not honoured its part of the bargain in the memorandum of understanding. That it has not paid up the value of the Hotel (Silver Hotel) and the Hostel (Mushroom) yet this was a condition procedure for the transfer of the investments to itself.

What this means is that it has breached the terms of the said memorandum of understanding. The type of remedy it is seeking is an equitable one. As the maxim goes; “ He who comes to Equity must come with clean hands,” We find that the Claimant has not come to equity with clean hands. It is seeking for injunction relieve over a matter it has not met its part of the bargain.”

We thus find that by failing to prove that it has complied with the terms of the memorandum of understanding entered between itself and the 1st Respondent, the Claimant has not established a prima facie with a probability of success.

Having failed to satisfy the first limb of the principle set was in the Giella –vs- Cassman Brow case above, we down our tools at this stage. We will not consider the other two (2) limbs.

Conclusion

The upshot of the foregoing is that we do not find merit so the Claimant’s Application dated 21/5/2020 and hereby dismiss it with costs in the cause.

Ruling read, dated and delivered on line this 23rd day of July, 2020.

Hon. B. Kimemia Signed

Chairman

Hon. F. Terer Signed

Deputy Chairman

P. Gichuki Signed

Member