[2022] KECPT 151 (KLR)

Kibuthu & another v Kenya USA Diaspora Sacco & 2 others (Tribunal Case 24 of 2021) [2022] KECPT 151 (KLR) (18 February 2022) (Ruling)

Neutral citation: [2022] KECPT 151 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 24 of 2021

J. Mwatsama, Vice Chair, P. Gichuki & B. Akusala, Members

February 18, 2022

Between

James M. Kibuthu

1st Claimant

Lloyd Kaburu Marangu

2nd Claimant

and

Kenya USA Diaspora Sacco

1st Respondent

Simon Nyagah

2nd Respondent

Ralph Kilondu

3rd Respondent

Ruling

1. The Application for determination has been brought under Section 80 (4) and (5) Co-operative Societies Act Cap 490, Rule 3 and 11 Co-operative Tribunal (Practice and Procedure) Rules 2009, Sections 1A,1B and 3A Civil Procedure Act Cap 21 Laws of Kenya, Order 40 Rules(1), (2) and (4) of the Civil Procedure Rules 2010 and all enabling provisions of the law.The Application seeks for:a.Spentb.That pending the hearing and determination of this Application inter-partes this Honourable Tribunal be pleased to issue an order of temporary injunction restraining the Board of the 1st Respondent a well as the 2nd and 3rd Respondents, their agents, servants or anyone acting under them from recruiting, hiring or in any way filing the position of the Chief Executive Officer pursuant to the Resolution of May 17, 2020 and the advertisement of December 23, 2020. c.That pending the hearing and determination of the main claim the Honourable Tribunal be pleased to order stay of implementation of the 1st Respondent’s Resolution dated May 17, 2020 and the recruitment of a Chief Executive Officer pursuant thereto.d.That the costs of this Application be borne by the Respondents.

2. The Application is premised on the grounds on the face of the Application and Supporting Affidavit of James Kibuthu dated January 22, 2021 to which he supported the Application stating that the 1st Respondent board issued a circular to members on May 30, 2020 of resolutions passed in a Board meeting on May 17, 2020 creating an office of the Chief Executive Officer.Members expressed their objection to the process as they termed it illegal and was not approved in a General Meeting contrary to Sacco By-laws.On June 9, 2020 the Board acknowledged the members concerns and objections and undertook to address the concerns.However, on December 23, 2020 the Board directly advertised for the recruitment a Chief Executive Officer.That the resolution to create a position of Chief Executive Officer is unlawful having not been approved by the General Meeting.It is in the interest of justice for the Tribunal to intervene and restrain the Respondent’s to protect interest of members of the Respondent.

3. The Respondent filed a Replying Affidavit opposing the Application.The Replying Affidavit was sworn by Simon Nyagah the 2nd Respondent sworn on February 23, 2021 and filed on March 3, 2021. The said response stated all decisions in the 1st Respondent are taken democratically and are accountable and transparent move. In paragraph 6 he states the general membership of the Sacco have mandated the Board to make decisions on its behalf to oversee day to day running of its operations.Paragraph 7 of the Replying Affidavit the Respondent aver by clause 39 .1 of the By-laws'Establish and approve and approve appropriate policies including Human Resource Management, savings, liquidity, investment, dividend, risk management, membership administration, cash handling and information management and preservation.'It is with the aforementioned powers that on October 28, 2019 instructed the firm of FMC/Fidel Mwaki & Company Advocates to review the Organization Structure, Human Resource Policies and Procedures, to develop a comprehensive Human Resource Manual guided by the Labour Law and to present to the Sacco’s Ad-hoc Committee a report together with a Human Resource Manual aligned with the Employment Act, 2007, Cooperative Societies Act and the Sacco’s Strategic Plan 2018-2022 (paragraph 8) and on February 5, 2020 they submitted its report.The said report recommended appointment of Chief Executive Officer and in the Board Meeting held on May 17, 2020 board approved through a resolution to recruit and appoint Chief Executive Office. They however acknowledge receiving members concerns over the matter.

4. The Respondent aver no threat or breach in their duty to the membership has taken place as the membership have relinquished powers to the Board Members.That the Claimant have not met the threshold as in the case of Giella -vs- Cassman Brown for injunctive orders.The Application seeks to usurp the powers of the membership as donated to the board.The Application should thus be dismissed as the delay costs the Respondent herein to the detriment of the general membership.Parties were directed to file written submissions to dispose off the applications and Claimant/Applicant filed their written submissions dated August 26, 2021 on August 27, 2021 and Respondent filed their written submissions dated August 26, 2021 on 2August 7, 2022. The Respondent as at the date of this Ruling had not filed their written submissions.

5. The issues for determination are thus:Issue oneWhether the Claimants have satisfied threshold to give Injunctive Orders?Issue twoCostsIssue oneWhether the Claimants have satisfied threshold to give Injunctive Orders?Having considered the Application, Affidavit and Written Submissions by both parties the case of Giella - vs- Cassman Brown and Company Limited [1973] EA 358 judge held:'The conditions for the grant of an interlocutory injunction are now, I think, well settled in East Africa'In the Applicant must show a prima facie case with probability of success. Secondly, an interlocutory Injunction will normally not been granted unless the Applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of. Thirdly if the court is in doubt, it will decide an Application on balance of convenience.'When dealing with the current Application the question we grapple with is which party has a lower risk of harm?Would it be in the interest of justice to stop the hiring of a Chief Executive Officer?Section 28 (3) Co-operative Societies Act stipulates:'The Committee shall be the governing body of the society and shall, subject to any direction from a general meeting or the by-laws of the co-operative society, direct the affairs of the cooperative society with powers to-a.Enter into contracts;b.Institute and defend suits and other legal proceedings brought in the name of or against the Cooperative Society; and do all other things necessary to achieve the objects of the Cooperative Society in accordance with its By-laws.'c.Specifies the Board is mandated to do other things necessary to achieve the objects of the Co-operative society. In this instance the hiring of a Chief Executive Officer can be said to fall under this mandate.It is thus that we find it is for the greater good of the 1st Respondent and its membership that the decision such as re-organizing the organizational structure ought to be brought to the attention of membership however this does not mean they cannot make administrative decisions for the good of 1st Respondent and its members.However, it is important to note that any Board is the governing authority of the Co-operative.The Board is bestowed with the power to hire and fire staff including the Chief Executive Officer, that is Human Resource as rightly averred by 2nd Respondent in his Replying Affidavit when he quoted paragraph 39. 1 of the By-laws.The Chief Executive Officer should not be subject to the membership of any Co-operative body and or Sacco.When the Respondent shared the resolution passed we take it, it was for information purpose but not to get approval of members even though some members expressed their reservations.Irreparable HarmWhat harm/irreparable damage would the Claimants suffer if a Chief Executive Officer is to be hired by the Respondent Board?The power was bestowed to them to act in all matter Human Resource and they rightly did so.Issue twoCostsCosts follow the events however, in this case we find costs to be in the cause.

6. The upshot of the above is that we find:1. The Application is found to be without merit2. The Respondent granted 14 days to file and serve Statement of Defence and Witness Statements in readiness for hearing which shall be fast tracked.3. Pre- trial defence on April 13, 2022. Notice to issue.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 18TH DAY OF FEBRUARY, 2022. Prepared by:HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 18. 2.2022MR. P. GICHUKI MEMBER SIGNED 18. 2.2022MR. B. AKUSALA MEMBER SIGNED 18. 2.2022Tribunal Clerk R. LeweriMalenya holding brief for Mr. Nyachio for the 1st , 2nd and 3rd Respondent.James Kabuthu: No appearance.HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 18. 2.2022