[2020] KECPT 8 (KLR)

REPUBLIC KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

C.T.C. NO.383 OF 2019

JAMES NJIRU WARUI...............................................................1ST CLAIMANT

ANGELUS NDERI RUBANG’I...................................................2ND CLAIMANT

SAMUEL MURIITHI NGAGE AND 239 OTHERS ...................3RD CLAIMANT

VERSUS

RWAMA FARMERS CO-OPERATIVE SOCIETY LIMITED ......RESPONDENT

RULING

What is before us for consideration and determination is the Claimant’s Application dated 12. 7.2019. It Seeks, in the main, the following orders:

a. That the Tribunal be pleased to grant a temporary injunction against the Respondent restraining it, it’s agents and/or servants from utilizing the award given in HCC.NO.836/2003 in Rawana Farmers Millers Limited; and

b. Costs

The Application is supported by the grounds on its face and the Affidavit of the 1st Claimant sworn on 12. 7.2019.

The Respondent has opposed the Application by filing a Replying Affidavits sworn by Julius Waweru on 19. 8.2019.

Claimant’s Contention

Vide this Application , the Claimant contend that on or about the year, 2003, the Respondent sued Thika coffee Millers for unpaid coffee proceeds for the period: 1997/1998,1998/1999, and 1999/2000 . That upon conclusion of the suit, the Respondent was awarded the sum of Kshs.15,097,783. 99. That Thika Coffee Millers preferred an Appeal which was subsequently dismissed. That at the time of dismissal, the decretal sum had accumulated to Kshs.27. 5 Million. That instead of the Respondent releasing the said sums to the Claimants, it resolved to disburse the money for it’s own factory’s use. That it is on this basis that they seek injunctive orders to prevent utilization of the said funds.

Respondent’s Contention

On its part, the Respondent has faulted the Claimants Application on the ground that it is incompetent, defective and bad in law. That the Claimants have not attached any documentary evidence to prove that they are or were members of the Respondent when the matter was pending in court for 17 years. That the only intention of the Claimants is to capitalize on winning/gains of the Respondent.

That the Claimants are blowing hot and cold at the same time as the 1st Claimant was the one who firstly proposed for the utilization of the funds towards the Respondent’s obligations.

That the other members who opposed HCC. No. 830/2003 are the ones who want to benefit from its fruits. That one such person is Stephen Ngare who even made a witness statement in favour of Thika Coffee Millers.

That the persons in the frontline championing payment of the proceed of the award to members are the Respondent’s former officials who messed up its operations, falsified documents in favour of Thika Coffee Millers and even testified in its favour.

That the same persons destroyed society’s records for the period in question and that the only records available are those of one factory. That it will be impossible to implement the Claimant’s demands as it is not possible to ascertain what is due to which member.

That due to inability of the Respondents to obtain records of production as to ascertain how much each member harvested and supplied for the particular period, it was decided that the money be used for the development of the society and improvement of the production and quantity of the coffee and that the same was decided by majority of the members in a general meeting.

Supplementary Affidavit

Vide the Supplementary Affidavit filed on 1. 10. 2019, the Claimants contend as follows:

That contrary to the contention that they did not document evidence to prove membership, the attached authority to act contain names of members and their membership numbers.

That infact, the Respondent at paragraph 8 of the Replying Affidavit acknowledges the 1st Claimant as its member. That it is not true that the 1st Claimant proposed the utilization of the said funds by advocating for payment of the society’s obligation but rather that he proposed that the Advocate’s fees of Kshs.8. 2 Million be paid first and that members does agree on how to utilize the balance. That no Special General Meeting has ever been held since 30. 1.2019 to decide on how to utilize the balance of the award. That the award was with respect to proceeds of members and that members should be paid.

Written Submissions

Vide the directions given on 23. 8.2019, the Application was disposed of by way of written submissions. The Claimant filed theirs on 1. 10. 2019 while the Respondent’s did so on 15. 1.2020.

We will consider the said submissions when determining the issues in controversy below.

Issues for determination

We have framed the following issues for determination:-

a. Whether the Claimants have established a proper basis to warrant the grant of an injunction; and

b. Who should meet the cost of the Application.

Temporary injunction

We have jurisdiction to make an order regarding temporary injunctions by dint of order 40 of the Civil Procedure Rules. Order 40 Rule 1 (a) provides thus:

“ Where in any suit it is proved by Affidavit or otherwise –

a. That any property in dispute in a suit is in danger of being wasted, damaged, or alienated by any party to the suit, or wrongly sold in execution of a decree, the court may by order grant a temporary injunction to restrain such act, or make such other order for the purpose of staying and preventing the wasting, damaging, alienation, sale, removal, or disposition of the property as the court thinks fit, until the disposal of the suit or until further orders.

Before exercising the above jurisdiction, we are guided by the Principles enunciated by the court in the case of Giella – versus- Cassman Brown [1973] EA. They include:

a. A prima facie case with a probability of success;

b. Irreparable damage; and

c. Balance of Convenience.

The court in the case of Mrao Limited versus first American Bank of Kenya Limited (2003) eKLR explained what Constitute a Prima Facie case in the following terms:

“.......A Prima Facie case is more than an arguable case. It is not sufficient to raise issues. The evidence must show an infringement of a right and the probability of the Applicant’s case upon trial. It is a case 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 as to call for an explanation from the latter......”

The question that arises is whether the Claimant’s vide the Instant Application have established a prima face case with a probability of success. It is their case that the Respondent successfully prosecuted HCC. No. 836/2003 which resulted in it being awarded Kshs.15,097,783. 99/=. That the said award was Appealed against and the said Appeal was subsequently dismissed. That at the time of dismissal of the Appeal, the decretal amount had accumulated to Kshs.27. 5 Million. That instead of releasing the said amounts to the members, the Respondent disbursed it to its factory’s use. That the said monies related to members produce and that the Respondent ought to have released the same to members.

On its part, the Respondent has opposed the grant of the said injunction on the ground that the said monies have been utilized in line with a resolution passed in a meeting convened as per the societies by-laws. That infact, it was the 1st Claimant who proposed how the said funds would be applied. That the decision to plough the money back to the society was as a result of lack of records of members production for the period in question. That the lack of the said records made it impossible to know how much each member harvested and supplied for the said period.

We have perused annexture JW-1 of the annextures to the Replying Affidavit of the Respondent sworn by Julius Waweru. It is the minutes of the meeting of the Respondent held on 30. 1.2019- Minute 4/30/01/2019 is the only minute where the matter of the proceeds of the suit is discussed. Vide the said minute, the only issue discussed and a resolution passed is the payment of the Lawyer’s fees. In reaction to the report presented by the Chairman of the 1st Respondent, one of the members, Mr. Daniel Warui asked about when the Kshs.19. 7 Million already paid would be paid to members. In response, the Chairman “informed him that all the funds of the society belongs to members and when all the money is paid he will convene a meeting to decide on the same.”

Apart from the issue of the legal fees, the minutes does not document any other resolution passed by the members. It is thus our finding that based on the material placed before us, we do not find any resolution by members of the 1st Respondent consenting to the utilization of the proceeds of the suit by them.

We say so taking note the fact that it is not in dispute that the said proceeds related to members produce supplied to the Respondent by its members from the year 1997 until 2000.

We have noted the contention by the Respondent that the records of produce for the said period cannot be traced and blames their disappearance on the Claimants. Though this is a matter for trial, the question that we pause preliminarily, is that, on what basis was the claim in HCC.No.386/2000 proved if not on the records of supply of the said produce?

Whilst we agree with the Respondent that the funds of the Respondent belongs to all the members, the question arises as regards the specific purpose for which the proceeds of the judgment on HCC. No. 386/2000 was meant to achieve. In simple terms, the 1st Respondent was pursuing payments for produce delivered and/or supplied to each member. It therefore follows that the members of the Respondent ought to be the primary beneficiaries of the said Judgment. This is so unless the said members waive the said right by resolving to apply the money in a General Meeting. As we have held above, no such meeting was convened and that no resolution was passed to sanction the Respondent to utilize the said proceed.

The upshot of the foregoing is that we find that the Claimants have established a Prima Facie case to warrant us issue a temporary injunction preserving the proceeds of the Judgment in HCC. No. 836/2003.

In light of our holding above, we find that we will not consider the other two limbs of the Principles in Giella versus Cassman Brown.

Conclusion

The upshot of the foregoing is that we find merit in the Claimant’s Application dated 12. 7.2019 and hereby order as follows:

a. That a Temporary Injunction is hereby issued restraining the Respondent whether by itself, its agents, and/or servants from further utilizing the proceeds of Judgment given in H.CC.No.836/2003,Rwama Farmers’ Co-operative Society versus Thika Coffee Millers Limited pending the hearing and determination of the main claim; and

b. Costs in the cause.

Read and delivered in accordance with the guidelines issued by the Hon. Chief Justice on 15. 3.2020, this 21stday of May, 2020.

Prepared by Hon. B. Kimemia Chairman, Hon. F. Terer Deputy Chairman, P. Gichuki Member.

With consent of the parties, the final orders to be delivered by email, as accordance to the prevailing measures during the covid-19.

Hon. B. Kimemia Chairman Signed 21. 5.2020

Hon. F. Terer Deputy Chairman Signed 21. 5.2020

P. Gichuki Member Signed 21. 5.2020