[2024] KEHC 14739 (KLR)

Kariuki v Kamau (Suing as the Chairperson Board of Management Metropolitan National Sacco) & 3 others (Civil Appeal E476 of 2024) [2024] KEHC 14739 (KLR) (Civ) (27 November 2024) (Ruling)

Neutral citation: [2024] KEHC 14739 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal E476 of 2024

LP Kassan, J

November 27, 2024

Between

Rehema Wanjiku Kariuki

Appellant

and

Esther Kamau (Suing as the Chairperson Board of Management Metropolitan National Sacco)

1st Respondent

Metropolitan Sacco

2nd Respondent

William Njoroge t/aWiri Narok

3rd Respondent

Wiri Narok/Wiri Leaks

4th Respondent

Ruling

1. This is an appeal against the Ruling of Lower court against a Preliminary Objection raised on Jurisdiction because of an Arbitration clause. In said Ruling dated 3rd day of April 2024, the Lower court dismissed the PO and said at paragraph 10;“The cause of action as depicted by the pleadings and the prayers being sought arises from the words being uttered by the Defendant through social media. This does not affect the running of the Sacco as the Applicant is not challenging the Operations of the Sacco by the Chair. The Applicant is seeking an injunctive orders against the Respondent from posting or disseminating defamatory statements. The prayers sought do not affect the Sacco directly but are personally affecting Esther Kamau who is the Chairperson of the Sacco.

2. I have read the proceedings, pleadings, submissions and relevant authorities. In a view to determining this matter, it is important to quote the Arbitration Clause (Section 76(1) of the Chapter 490) which states;“If any dispute concerning the business of a Co-operative society arises: -a.Among members, past members and persons claiming through members, past members and deceased members; orb.Between members or deceased members, and the society, its committee or any officer of the society; orc.Between the society and any other c-operative society; it shall be referred to the Tribunal.

3. The following arises as a result of this provision;1. Nature if dispute.What is important to note is the use of the word "any" dispute concerning the business of a co-operative society. This dispute much directly or indirectly touches on the business of the society. To understand the nature of the dispute between the Appellant and the respondent, it is imperative to read the Plaint which is the main complaint. The following are excerpts which I find relevant under this limp: -Paragraph 5 " That in the foregoing Defendant's incitement, harassment.... have visited upon the Plaintiffs an embarrassment, lowered their dignity..... consequently, has visited losses upon the Second Applicant".The use of the word " losses" automatically qualifies it to be categorized as part of issues affecting the society because if the society makes losses, its business is directly affected. A loss is key in any performance of a society.Paragraph 18 says“additionally, the defendant composed write ups populated by falsehoods and allegations against the plaintiff and at one occasion referred to me and other board members as" Ngombe" and occasionally insulted members against contributing towards their shares and savings and also settling loans thus visiting the Applicants losses which are unbearable. "What comes out from this paragraph is that the dispute affects the board too. Insulting members against contributing towards shares and savings directly affects the business of the society for obvious reasons which the Plaintiff terms as "unbearable". The same is seen in Paragraph 20 of the plaint which calls on members to stop deductions. From the above it is clear that the alleged defamation affects the business of the Co-operative society.2. Parties to the Suit.The first Plaintiff sues as a chairperson of the Co-operative Society. The acts of the alleged defamation arise out of her position as the Chairperson. If for example the courts award her damages, would she share the award with the members given the fact that her position prompted this suit? How can the court balance the damages due to her as a person and the damage suffered by the Society? The reputation of the Plaintiff has been damaged before both members and the Public. Some of the excerpts insinuate alleged financial irregularities which is directly related to the running of the Society. It appears therefore that the Appellant has a dispute as to how the business of the society is run.3. Reference to arbitration;those that he cannot solve, an arbitrator has powers to refer those beyond his mandate to the Court. In this case, there are damages that affect the Plaintiff as a person and as a Chairperson.Powers of an arbitrator is wide in solving issues. It is noteworthy that where an arbitrator finds that there are intertwined issues which are composed of things that he can solve and4. Members of the society.bona fide member in a dispute pitying her with the Society or another member may appear discriminatory.The Appellant is a member of the society and is affected by the Arbitration clause. To remove the effects of this arbitration clause against a5. Doctrine of Exhaustion.This need not be over emphasized mainly because reference to Arbitration is a choice but not a final determination of a matter and besides ,disputes in Saccos are better solved by an arbitrator who conducts extensive and somehow informal hearings. There is a reason why parties include an arbitration clause and courts cannot vary terms of engagement agreed by groups and members. Let the arbitrator assess issues that fall within its mandate first before recourse to Courts are sought.

4. The onset of the above is that the Application is allowed and the Lower Courts Ruling Overturned. Matter is referred to arbitration. The suit at the lower court stands dismissed. Each party shall bear own costs.

DELIVERED, DATED AND SIGNED AT NAIROBI THIS 27THDAY OF NOVEMBER 2024. HON. L. KASSANJUDGEIn the presence of;Shilla holding brief for Omulama for the AppellantMukamani for the RespondentCarol – Court Assistant