Embu Teachers Co-operative Society Limited v Kivungo [2025] KECPT 102 (KLR)

Embu Teachers Co-operative Society Limited v Kivungo (Tribunal Case 44 of 2006) [2025] KECPT 102 (KLR) (30 January 2025) (Judgment)

Neutral citation: [2025] KECPT 102 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 44 of 2006

Janet Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members

January 30, 2025

Between

Embu Teachers Co-operative Society Limited

Claimant

and

Daniel Kivungo

Respondent

Judgment

1. The Claim herein is contained in the amended Statement of Claim dated 5th February, 2010, wherein the Claimant prays for judgment against the Respondent for:-i.The sum of Kshs. 407,390. 15/=.ii.Costs of this Statement of Claim.iii.Interest on (ii) above at court rates.iv.Interest on (i) above at 20% per annum from 19/11/2003 until payment in full.

2. It is the Claimant’s Claim that the Respondent who was a committee member of the Claimant when in 2003, an inquiry was conducted in accordance with the Co-operative Societies Act over the affairs of the Claimant Society; that in the said inquiry the Respondent was found to have misappropriated and/or misapplied certain monies belonging to the Claimant as a consequence of which the Registrar for Co-operative Societies ordered that the Respondent be surcharged the sum of Kshs. 407,390. 15/= together with interest at 20% per annum from 19/11/2003 until payment in full; that despite several demands, the Respondent has failed, ignored and/or neglected to make good the Claimant’s Claim.

3. The Respondent’s response to the amended Statement of Claim is contained in the Reply to amended Respondent’s Reply to amended Statement of Claim dated 16th February, 2010.

4. In his reply, the Respondent stated that he was not served with the said Surcharge orders; that the Claim before this Tribunal is incompetent and Res-judicata; that the Appeal No. 1 of 2004 was filed raising serious and fundamental issues and that the issues were raised against the inquiry report and finding of the inquiry team; that the Claimant’s Claim for 20% interest per annum from 19th November 2003 is time barred having been brought more than 6 years after the inquiry report findings; that the charge of 20% interest under the alleged surcharge order is not in the inquiry report and was not subject to the Annual General Meeting of the members as provided under the Co-operative Societies Act; that the surcharge order issued by the Commissioner for Cooperatives is at variance with the General Members Resolution on the amount to be surcharged the Respondent that the Claimant’s Claim is fictitious and the Respondent denies owing money to the Claimant.

5. The Claimant, in rejoinder to the Respondent’s Reply to amended Response to Statement of Claim filed a Reply thereto dated 23rd February, 2010; in which he reiterated the contents of the amended Statement of Claim and denied the Respondent’s averments in regard to the Claim for 20% interest.

Claimant’s Case 6. The Claimant’s witness John Njue Kamweru, “CW1” adduced sworn evidence wherein he confirmed that the Respondent was a member of the Claimant and confirmed that the Claimant filed a Statement of Claim arising from the surcharge orders of 2003 as per the resolution reached by the members in the minutes of the SGM of 2nd August, 2003 in Embu Municipality Social Hall; that a Notice of Intention to surcharge dated 13th September, 2003 was issued to the Respondent and the surcharge order was made on 19th November, 2003.

7. The witness produced and adopted the aforesaid documents; as the Claimant’s evidence.

8. On cross-examination “CW1” stated that the Claimant is still in existence and was rebranded in 2012 to Winners Sacco; that the Statement of Claim was amended; that he is the Treasurer of the Claimant, having been re-elected every 3 years; that the day to day running of the Society is done by the CEO and Manager of the Society; that the Claimant and committee members were not involved in the day to day management; that the inquiry was done and misappropriation was discovered as per page 20 to 64 of the inquiry report produced.

Respondent’s Case 9. RW1” who is the Respondent herein, Lawrence Maina adduced sworn evidence stating that he is a retired teacher and was a member of the Claimant and an official; that an Inquiry was conducted after they left office on allegation that some money had been misappropriated. On cross-examination, he reiterated that the inquiry was done and the report was adopted; that he did not receive the surcharge order; that after the surcharge order, they filed Appeal Number 1 of 2004 and he did not know the appeal was about before the Minister; that they filed Appeal number CTA 50 of 2007 as a group as they did not receive the surcharge order and an appeal against CTA 50 of 2007 being Appeal No. CA 350 of 2008 also got exhausted.

10. On clarification being sought by members of the Tribunal, the Respondent stated that there was issued a circular for the order; that the Appeal to the Tribunal was filed out of time as he thought the case had ended.

11. After the hearing, parties were directed to file and serve Written Submissions. However, as at the date of writing this judgement only the Claimant had filed its Written Submissions dated 1st June, 2024.

Analysis and Determination 12. We have considered all the documents and pleadings filed by the parties and have the following issues to consider:

1. Whether or not the Firm of Gitonga Muriuki is still on record for the Respondents.

13. When this matter came up for hearing on 24th April, 2024, , Mr. Kijaru Advocate appeared and informed the Tribunal that he had just been instructed by the Respondent on 19th April, 2024 and needed time to seek proper instructions from the Respondent; and that he had not managed to find and serve the Respondent’s previous Advocate with the Notice of Change of Advocates. After consideration of the matter on principles of natural justice and equity, the Tribunal declined to grant an adjournment and the case proceeded to hearing.

14. The Claimant’s Witness adduced evidence and was cross-examined by the Respondent’s Advocate Mr. Kijaru.

15. Similarly, the Respondent’s Advocate was led in evidence by Mr. Kijaru Advocate and was cross-examined by Mr. Mbuthia Advocate for the Claimant.

16. In the Claimant’s submissions dated 1st June, 2024, the Claimant raises an objection to the effect that as at the date of the hearing, Mr. Kijaru Advocate had neither filed nor served the Notice of Change of Advocates, hence as at the date of hearing, the 24th April, 2024, the firm of Gitonga Muriuki was on record for the Respondents and therefore everything done by Kijaru Advocate on 24th April, 2024 ought to be expunged and the Claim treated as unopposed.

17. We have considered the Claimant’s Advocate’s Objection and make the following findings:1. It is on the record that the firm of Kijaru Njeru and Company Advocates filed a Notice of Change of Advocates on 22nd April, 2024. 2.The Tribunal dispensed with service of the Notice of Change of Advocates when it allowed the matter to proceed as it did.3. The absence of Gitonga Muriuki and Company Advocates on the day of hearing after the matter had been previously marked for final adjournment was prejudicial to the Respondent.4. The Tribunal is not a Court of technicality and shall in its discretion determine issues in the interest of justice.

18. In the Civil Appeal No. 159 of 2013, Romane Agencies Limited Vs Tanathi Water Services Board, It was held by the High Court “that the requirement for service of a Notice of Change of Advocates is for purposes of informing the former Advocate that a Notice of Change has been filed in an appropriate court and does not affect the validity of the Notice of Change of Advocates.” In the same decision, the court in dismissing an application which sought to have a Notice of Change declared Invalid, held on the same breadth that the service of the Notice of Change of Advocates on the opponents Advocates served only to notify the parties of the new address of service.

19. Consequently, we rely on the High Court decision aforesaid and rule that the Notice of Change of Advocates filed on 22/4/2024 is valid and that as at the 24th April, 2024, the firm of Gitonga Muriuki and Company Advocates had been replaced by the firm of Kijaru Njeru and Company Advocates as the Advocates of the Respondent.

Whether or not the Claimant’s Claim has merit.

20. It is trite as per Section 74 of the Cooperative Societies Act, any person aggrieved by an Order of Surcharge may within thirty days, appeal to the Tribunal and failure to do so renders the surcharge sums payable.

21. From the evidence adduced by the Claimant’s and Respondent’s witnesses during the hearing, it is clear to us that there was an Inquiry into the affairs of the Claimant Society, during which it was found that there had been misappropriation; that the inquiry pertained to the events or affairs for the period of the term of office of the management committee in which the Respondent was a member; that the inquiry report was duly adopted at a Special General Meeting; that Notice of Intention to surcharge the Respondent was issued; that there was finally issued a surcharge order; that though the Respondent claims that he was never served with the surcharge order there is evidence on record that he filed an Appeal to the Minister an Appeal to the Tribunal and an Appeal to the High Court, all of which got exhausted lawfully, hence this Claim; that the surcharge order provided for the payment of the surcharged amount with interest at the rate of 20% per annum; that though the Respondent contests the rate of 20% per annum charged by the Commissioner of Cooperative in the surcharge order, we note that Section 73 2 (a) of the Co-operative Societies Act empowers the Commissioner to order repayment of the misappropriated money to the society together with interest at such rate as the Commissioner thinks fit; that it therefore goes without saying that the interest rate is subject to the Commissioner’s discretion and not the General meeting of members.

22. In the upshot we find that the Claimant has proved his case to the required standard and the same is therefore merited. Consequently, we enter judgement in favour of the Claimant and against the Respondent as prayed in the Amended Statement of Claim dated 5th February, 2010 for Kshs. 407,390. 15/= plus costs and interest.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF JANUARY, 2025. HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 1.2025HON. BEATRICE SAWE MEMBER SIGNED 30. 1.2025HON. FRIDAH LOTUIYA MEMBER SIGNED 30. 1.2025HON. PHILIP GICHUKI MEMBER SIGNED 30. 1.2025HON. MICHAEL CHESIKAW MEMBER SIGNED 30. 1.2025HON. PAUL AOL MEMBER SIGNED 30. 1.2025Tribunal Clerk MutaiMbuthia advocate for ClaimantNjeru advocate for Respondent – No appearanceHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 1.2025