[2021] KECPT 507 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL APPEAL CASE NO.2 OF 2020

BETTY JOYCE MATIANYI………………................................... APPELANT

VERSES

WEVARSITY SACCO SOCIETY LTD……………….............RESPONDENT

JUDGMENT

The matter for determination is an Appeal filed by the Appellant vide an Appeal dated 28/7/20 on the grounds that :

i. The Commissioner erred in both Law and fact issuing a surcharge order against the Appellant when the same issue was well canvassed and settled in claim No.352 and 180 of 2019 respectively.

Parties filed their Written Submissions and documents. The Appellant filed their Written Submissions dated 9/2/21 on 17/2/21 and the Respondents filed Written Submissions on 9/2/21.

Appellant’s submissions

1. The Appellants submitted that they preferred their appeal against an inquiry report of the Respondent and Surcharge order dated 26/2/20 made by the Commissioner of Co-operatives.

The Appellant submitted that the court should take judicial notice that she had earlier gone to court seeking refund of her deposit vide her Claim in CTC 180 of 2019. The Respondent filed another case CTC 352 OF 2019 for repayment of an amount Kshs.1,955,227. 10/= which was a ‘misappropriation’. Later on, the parties therein recorded a consent in respect of both claims.

The Appellant submitted that the surcharge order dated 26/2/20 was not presented before court as the consents were being recorded for adoption by court but later surfaces later on. "The Respondent were all the while in possession of said inquiry report and Surcharge Order.

The Appellant relied on ET –VS-ATTORNEY GENERAL & ANOTHER (2012) eKLR

“The courts must always be vigilant to guard against litigants evading the doctrine of res judicataby introducing new causes of action so as to seek the same remedy before the court. The test is whether the plaintiff is in the second suit is trying to bring before the court in another way and in a form a new cause of action which has been resolved by a court of competent jurisdiction. In the case of Omondi v National Bank of Kenya Limited and Others[2001] EA 177the court held that, ‘parties cannot evade the doctrine of res judicata by merely adding other parties or causes of action in a subsequent suit.’In that case the court quoted Kuloba J., in the case of Njangu v Wambugu and AnotherNairobi HCCC No. 2340 of 1991 (Unreported)where he stated, ‘If parties were allowed to go on litigating forever over the same issue with the same opponent before courts of competent jurisdiction merely because he gives his case some cosmetic face lift on every occasion he comes to court, then I do not see the use of the doctrine of res judicata ....’

That this appeal is merited in line with provisions on Section 74(1) CSA and that it should be allowed.

Respondent’s Submissions

2. The Respondent in their Submissions gave a brief background of the Appellants stating she was employed by the Respondent on 1/11/2011 as an accountant and rose up he ranks of acting manager as at 4/6/2012. In between there were financial irregularities and cash shortages which prompted the Respondent to question her.

The Appellant was suspended on 7/7/14 over professional misconduct and subsequent before she could resume work. She resigned vide a letter dated 31/7/14.

She made commitments to refund the shortage dated 1. 7.2014 for kshs.1,841,428/-, however, she further wrote a letter dated 16. 9.2014 for the amounts to be deducted from her salary at Kshs.50,000/= per month she did not keep her commitment.

3. The Respondent was thus compelled to engage the Commissioner for Co-operatives to investigate the matter alongside the several operations of the society and she was given opportunities to defend herself and an intention to surcharge was issued on 27. 3.2017 and surcharge order on 26. 2.2020, an inquiry was done.

The Respondent therefore submitted that the surcharge order dated 26/2/20 was properly issued.

ISSUES FOR DETERMINATION

1. Res Judicata

2. Merits of Appeal

3. Costs

ISSUE ONE

1. RES JUDICATA

4. Section 7 of the Civil Procedures Act provides:

“ a suit will be Res Judicata if the matter has been directly and substantially in issue in a former suit between the same party or parties under whom they or any of them claim, litigating under the same file in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.”

Question: What were the issues in CTC 180 OF 2019 and CTC 352 of 2019?

We note that the Appellant has not availed certified copies of proceedings and /or copy of the Consent that guided them to compromise the two cases cited above despite the same being in (index page of table of document).

However, we note that the Respondent’s list of documents filed the statement of Claim in 352/19. The claim is for “repayment of the principal sum as particularized at paragraph 6 (paragraph 6 Repayment of the entire sum Kshs.1,955,277. 10)” among other prayers for interest on the amount.

The matter CTC.NO.180/19 is allegedly for refund of the savings of the appellant.

The appellant indicated that consents were entered into and the 2 suits were compromised. We are however, not told the terms of the consents and to what extent the matter was compromised nor the date of the said consents.

We note that the surcharge order was issued on 26. 2.2020, yet the suit that was compromised was filed on 19. 12. 2019. we therefore reasonably note that the said surcharge order was not the issue in the 2 suits filed before the said surcharge order was issued.

The process leading to a surcharge order is clear under Section 58 Co-operative Societies Act

The process of a surcharge order is a process provided for under Section 58 Co-operative Societies Act which provides that:

(i) The Commissioner may of his own accords shall on direction of Minister as the case be hold an inquiry or direct any person authorized by him in meriting to hold an inquiry into the by-laws, working and financial conditions of any Co-operative society.

(ii) The commissioner shall report findings of his inquiry at the General Meeting and shall give directions for the implementation of the recommendations of inquiry report.

Section 73 Co-operative Society Act provides that where it appears that any person.. the Commissioner may on his own accord or on the Application of the liquidator or of any creditor or member inquire into the conduct of such person....

Upon inquiry under sub Section 1 the Commissioner may if he considers it appropriate make an order to repay or restore the money or property ..as the Commissioner deems just.

10. The Commissioner therefore is an administrative body which carries out its function as mandated under the Co-operative society Act. Ruling the process of inquiry, leading to surcharge order the affected parties are notified of the process and accordingly invited to challenge the process. Indeed after an inquiry report is completed it is presented to the General meeting of members for discussion, nothing prevented the appellant from raising any issue/objection in regard to the inquiry report at that stage.

Indeed the extension of the inquiry report was extended to 28. 2.2015 as per the notice issued by the Commissioner on 15. 12. 2014 and on 13. 7.15 the Respondent wrote to the Appellant demanding for payment of the lost money and he was granted 14 days to do so.

After the adoption of the inquiry report in the General meeting a notice of intention to surcharge under section 58 and 73 Co-operative Societies Act was issued to the Claimant and six others vide Notice of intention dated 27. 3.2017.

11. The Appellant was granted the opportunity to show cause why he should not be surcharged as per the unanimously adopted findings and recommendations of the inquiry report.

No such cause was shown within the 14 days window a Surcharge Order was therefore issued on 26. 2.2020. The Process taken or carried out by the Commissioner is and administrative process which parties are granted audience to air or challenge the process and if the parties are not satisfied with the administrative process they have a right to file a Judicial Review in the High Court under the Administrative Action Act.

Once the Surcharge Order is issued then the party is required under Section 74 (1) Co-operative Societies Act to appear against the said order within 30 days to the Tribunal.

The only avenue after the surcharge order was issued was an appeal against the Surcharge Order under Section 74 (1) Co-operative Societies Act.

We note that the matters directly and substantially in issue in the 2 matters are not the same issues in the surcharge order was issued on 26. 2.2020. The Commissioner co-operative Development being an administrative body is neither a court nor a Tribunal as enumerated in the Res judicata principle. Indeed nothing presented by the appellant indicates that the appellant indicates. That the appellant raised the issue of the 2 suits before the Commissioner. The appellant issued a letter of commitment to repay the amount Kshs.1,841,428/= on 1. 7.2014 and during the inquiry, the appellant was granted the opportunity to participate in the process.

The surcharge order was issued after the suit was filed and therefore could not have been the issue in the said 2 suits.

This is in light of the fact that the contents of the said consents were not availed. Its trite law that a party alleging an act insist prove that fact and in this case, no details of the consents were availed.

If indeed the appellant was aggrieved by the inquiry, they should have moved the High court in a petition for Judicial Review.

2. ISSUE TWO

MERITS OF THE APPEAL

Section 58 and 74 of the Co-operative Societies Act provides:

“ for the issuance of inquiry and surcharge orders.

The procedure for filing an Appeal in the Co-operative Tribunal is provided for under Rule 8 of the Co-operative Tribunal Rules 2009, sub rule 2. ”

The Mandatory documents to be filed with the Memorandum of Appeal are;

i. Memorandum of Appeal

ii. Inquiry Order

iii. Inspection Order

iv. Minutes of General Meeting

v. Notice of intention to Surcharge

vi. Surcharge Order

The provisions are in regard to Appeal’s against surcharge orders as enumerated under Section 7 of Co-operative Societies Act which is the mandate of the Co-operative Tribunal.

We however note that the Surcharge Order dated 26/2/20 was not in place at the time the two suits CTC 180 of 2019 and CTC 352 of 2019were filed.

This is what the Appellant seeks to challenge stating that this as an afterthought by the Respondents.

The Surcharge Order was issued on 26/2/20after the inquiry report was issued and adopted all issues raised before him the Commissioner were canvassed by the parties.

Section 58 and 74 Co-operative Societies Act as aforesaid provides for the issuance of inquiry and Surcharge Orders.

The procedure for filing an Appeal in the Co-operative Tribunal is provided for under Rule 8 Co-operative Tribunal Rules 2009 sub rule 2.

In this matter the Appellant has challenged the process culminating into the surcharge order dated 26. 2.2020. The Appellants have submitted that the said orders should not have been issued as it was Res judicata.

In our understanding the Appellant challenges the decision and powers of the commissioner to issue a surcharge order.

We find that the Surcharge Order is not Res judicata as per the reasons above.

3. CONCLUSION

We therefore find that the Appellant’s appeal has no merit and uphold the Surcharge Order dated 26/2/20 as properly issued.

Costs follow the cause and therefore order for costs of the Appeal of the Respondents to be paid by the Appellant.

Judgment signed, dated and delivered virtually this 27thday of May, 2021.

Hon. B. Kimemia Chairperson Signed 27. 5.2021

Hon. J. Mwatsama Deputy Chairperson Signed 27. 5.2021

Mr. P. Gichuki Member Signed 27. 5.2021

Tribunal Clerk Leweri

Getanda Advocate for Appellant: Present

Abok Advocate for Respondent: Present

Hon. B. Kimemia Chairperson Signed 27. 5.2021