[2025] KECPT 193 (KLR)

Newfortis Sacco Limited v Nyeri Teachers Plaza Housing Cooperative Society (Tribunal Case 591 of 2023) [2025] KECPT 193 (KLR) (30 January 2025) (Ruling)

Neutral citation: [2025] KECPT 193 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 591 of 2023

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

January 30, 2025

Between

Newfortis Sacco Limited

Claimant

and

Nyeri Teachers Plaza Housing Cooperative Society

Respondent

Ruling

1. For determination before this Tribunal is a Preliminary Objection Application dated 7th November 2023 filed by the Respondents and premised on the following grounds:-a.That the Claimant’s suit is futilely defective in law as all the pleadings including the verifying affidavit have been executed by a stranger and a person without legal authority hence a breach of the relevant provisions of the Civil Procedure Rules 2010. b.That the Claimants suit is based on specific performance of a transfer/sale agreement dated 9. 8.1999 and hence statutory time barred by the provisions of Section 4(1) of the Limitation of Actions act Cap 22 Laws of Kenya and hence an abuse of the Court process.c.That this Honourable Tribunal lacks the requisite jurisdiction to entertain the Claimants suit in view of the legal grounds cited herein and the entire Claimants suit is a non-starter and a legal muddle.

2. The genesis of this Preliminary Objection arose from a Statement of Claim dated 19. 9.2023 which was filed by the Claimants on 9th October seeking for judgement against the Respondents for payment of Kshs. 3,9884,830/- relating to a sale and transfer of the Claimants building development L.R.No. Nyeri Municipality Block 111/91.

3. A verifying Affidavit signed by Mr. John Mathinji, a Claimants list of witnesses together with 14 List of Documents all dated 19th September 2023 were filed by the Claimants to support the Claim.

4. In response, a Statement of Defence and a Counter-claim dated 7th November 2023 was filed by the Respondents who denied owing the Claimants Ksh.39,884,8309/- and further denied that there was a sale agreement dated 9. 8.1999 for transfer of land registered as L.R. No. Nyeri Municipality Block 111/91.

5. In furtherance of Defence, the Respondents stated that the said parcel of land L.R.No. Nyeri Municipality Block 111/91 was a donation from Kenya National Union of Teachers (KNUT) Nyeri Branch for use for the benefit of all teachers employed by TSC hence the transfer was made from the former Nyeri Teachers Sacco Ltd to Nyeri Teacher Plaza housing Society Ltd who are the Respondents herein and are a sister Sacco to the Claimant Sacco.

6. At a pre-trial conducted by the Tribunal held on 18. 4.2024, the Respondents pointed out that they had raised a Preliminary Objection on time limitation which is needed to be dispensed with. The Claimants advocate on the other hand stated that the Preliminary Objection need to be tested through evidence.

7. The Tribunal ordered that the Claimants and the Respondent should each file and serve their written submissions in regard to the Preliminary Objection dated 7. 11. 2023 within 14 days.

8. On the mention dated of 24. 10. 2024, the Claimants and the Respondents attended the Tribunal and each of theme confirmed to have filed and served their written submissions thus necessitating the writing of this ruling on the Preliminary Objection.

The Claimants Written Submissions 9. The Claimant framed three issues for determination namely:-i.Whether the Claimants suti is time barred.ii.Whether the honourable tribunal lack jurisdiction to entertain the suit.iii.Whether the executor of the pleadings is a stranger.On the 1st issued the Claimants relied on the provisions of Section 23(3) of the Limitation of Actions Act which states:‘Where a right of action has accrued to recover a debt or other liquidated pecuniary claim or a claim to movable property of a deceased person, and the person liable or accountable therefore acknowledge the claim or makes any payment in respect of it, the right accrues and not before the date of the acknowledgement or the last payment’The Claimant argued out that when they wrote a letter of demand dated 13th January 2020 to the Respondents demanding for settlement of the outstanding sum of money owed to them, the Respondents responded vide a letter dated 21. 5.2020 and requested the Claimants to allow them to pay the outstanding sum in installments. On the 2nd issued the Claimants submitted that the Tribunal has jurisdiction and quoted section 76(1) (c) of the Co-operative Societies Act Cap 490. Finally on the 3rd issued the Claimants stated that Mr. John Mathinji is the CEO of the Claimant and therefore an officer within the meaning of the interpretation of section 2 of the Co-operative Societies Act Cap 49. In totality the Claimants stated that the Respondents preliminary objection dated 7. 11. 2023 is not merited.

Respondent Written Submissions 10. The Respondents on their part submitted one issue which was;1. Whether the Respondent has rightfully raised a preliminary objection.To argue out the matter, the Respondent relied on the provisions of section 4(1) of the Limitation of Actions Act which provides that:‘The following actions may not be brought after the end of six years from the date on which the cause of action accrued,a.Actions founded on contractb.…c.….The Respondents pointed out that the Claim is founded on a contract which was entered by the parties on 9. 8.1999 and any claim on the same could have been filed on or before 9. 8.2005. It is the Respondents argument that the current suit was filed on 19. 9.2023, a period of over 243 years since the course of action arose and yet the requisite leave was not sought by the Claimant in the Tribunal to grant them orders to file the suit out of time. The omission is fatal and cannot be cured by the provisions of Article 159 of the Constitution.

11. Touching on the issue of execution of documents by a stranger who in this case is Mr. John Mathinji, the Respondents argued out that the said stranger executed the Claimants verifying affidavit without a written authority which is a breach against order 4 Rule 1 of the Civil Procedure Rules 2010. In conclusion, the Respondents contested that their preliminary objection dated 7. 11. 2023 is merited.

Analysis 12. Having read and analyzed the pleadings and the written submissions of both the Claimant and the Respondent and examined the list of documents annexed to the statement of Claim and the Defence, we have also read the written submissions of the Respondent/applicants and of the Claimant/Respondents together with the cited authorities hence set to consider the three (3) grounds raised by the Respondent/Applicants in the Preliminary Objection dated 7. 11. 2023.

13. First, it is a well settled principle of law that the parameters for consideration of a preliminary objection laid by the Court of Appeal in the case of Mukisa Biscuits manufacturing Co. Ltd vs. West end Distributors Ltd (1969) E.A 696 and set out those principles to determine the merits or otherwise of a preliminary objection by holdings thus;‘A Preliminary objection consist of a point of law which has been pleaded or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are as objection to the jurisdiction of the court or plea of Limitation or a submission that the parties are bound by the contract giving rise to the suit to refer the suit to arbitration’

14. Guided by this principle, we now proceed to consider the objections raised starting from objection number one. The Respondent/applicant aver that the Claimant’s suit is defective in law because all the pleadings including the verifying affidavit have been executed by a stranger and a person without legal authority contrary to order 4 rule 1(4) of the Civil Procedure Rules which provides that;‘Where the Plaintiff is a corporation, the verifying affidavit shall be sworn by an officer of the company duly authorized under the seal of the Company to do so.’

15. In response to this point of objection the Claimant/Respondent stated that Mr. John Mathinji who signed the verifying affidavit dated 19. 9.2023 is the Chief Executive officer of the Claimant Sacco who is mandated in the course of his duties to sign documents as an officer and on behalf of the Sacco.

16. On the Tribunal’s part we note that Mr. John Mathinji is listed as the Claimant’s witness and a witness statement dated 19th September 2023 was sworn by him as the Chief Executive Officer of the Claimant Sacco. With this in mind he is therefore an office of the Sacco who under the by-laws of the Sacco is mandated to transact the business of the Sacco which include signing of contracts and other legal instruments including verifying affidavits. Under section 2 of the Co-operative Act Cap 490 an officer of a Sacco is interpreted to include ‘ a chairman, vice chairman, secretary, treasurer, committee member, employee or any other person empowered under any rules made under this Act or by-laws of a Co-operative Society to give directions in regard to the business of the Society’

17. It is without doubt Mr. John Mathinji is an employee of the Sacco by virtue of being the CEO and the argument that he does not have the legal authority to sign a verifying affidavit does not wish away the suit of cause any prejudice to the Respondent/applicant. Instead, because of such a technicality the suit will drag in the Tribunal and cause unnecessary backlog.

18. Furthermore Rule 4 of the Co-operative Tribunal (Practice and Procedure) Rules 2009 provide that;‘The Tribunal shall have power and discretion to decide all matters before it with due speed and dispatch without undue regard to technicalities of procedure’.It is our considered view that a lack of filling an authority by the board to authorize Mr. John Mathinji their CEO to sign a verifying affidavit is not fatal but a technicality which is cured by the provisions of Rule 4 above.

19. Flowing from the above, we find that ground No.1 of the preliminary objection does not have merit and therefore dismissed.

20. Turning to ground No.2 of the Preliminary objection, it is the argument of the Respondent/Applicant that the Claimant’s claim is time barred by virtue of provisions of section 4(1) of the Limitation of Actions Cap 22 laws of Kenya which limits the time of actions founded on contract to six (6) years.

21. In the written submissions of the Respondents/Applicants we note that they argue that it is 24 years from the time that the contract of sale was entered which was on 9. 8.1999 yet section 4(1) of the Limitations of action Act lays the threshold to be six (6) years which ende3d on 9. 8.2005. Furthermore, the Respondent/applicants state that the Claimants/Respondents have not shown that they applied and were granted leave to file the suit out of time. On this, the Claimant/Respondent argued in their written submissions that section 23(3) of the Limitations of action Act provide grounds for their opposing views. The section states:‘Where a right of action has accrued to recover a debt or other liquidated pecuniary claim of a claim to movable property of a deceased person and the person liable or accountable therefore acknowledges the claim or makes any payment in respect of it, the right accrues on and not before the dated of the acknowledgement or the last payment’.

22. The Claimant went further to point out that when they wrote a demand letter on 13. 1.2020, the Respondents responded vide a letter dated 21. 5.2020 and did not deny the debt instead they requested that they be allowed to pay the outstanding amounts by installment.The Claimant/Respondents applied the holding of the court of Appeal in the case of Afro Freight Foundation Ltd vs. African Liner Agencies (2009) eKLR to support their argument. In the case the Court of Appeal held that:‘When faced with similar circumstances, the Plaintiff/appellant is allowed on the basis that section 23(3) of the Limitations of actions Act is applicable to revive a cause of action where there is a proven acknowledgement and time would start running afresh therefrom’.In the letter dated 21. 5.2020, the Respondent /Applicant stated in the last paragraph of the letter addressed to the Claimant/Respondent that,“As we appreciate your understanding, we commit ourselves as follows:a.We pay an installment of Ksh.150,000 being the initial payment.b.In the subsequent years, the Society to be paying Khs.100,000/- from returns due to members”

23. The same contents are repeated by the Respondent/applicant in paragraph 3 of another letter dated 24th April 2023 addressed to the Chairman of the Claimants/Respondent about the commitment to make the payments. In our view the issues raised in this matter are similar to the circumstances that led the Court in the case of Bush v. Stevens (1963) to hold that.“,,,,,,it provides that in specific circumstances of an acknowledgement or payment, the right shall be given a notional birthday and on that day, like the phoenix of fiable, it arises again in renewed youth and also like phoenix, it is still itself’.This means that when the Respondent acknowledged the existence of the debt and proposed to make payments in instalment, the date of Limitations of Actions shifted from the old date to the new date when they made payment to the Claimant/Respondent through cheque No.003152 for Ksh.100,000/- on 5. 5.2021 in acknowledgement that they have a debt with them.

24. Considering that the Respondents/Applicant acknowledged that they owe money to the Claimants/Respondents and even went further to pay some installment at a later date, we find that the provisions of section 4(1) of the Limitations of Actions Act is overtaken by the provisions of section 23(3) of the same Act.

25. Finally, we are persuaded that although the Respondent/Applicant contend that the suit is time barred, it was revived by their part payment made on 5. 5.2021 and therefore the cause of action shifted and started running from the said date. Counting six (6) years from 5. 5.2021 it means that the period will lapse on 5. 5.2027 yet the suit was filed on 9th October 2023 which is within the time frame. On this it is our finding that the Respondent/Applicant’s Preliminary Objection that this suit is statutorily time barred does not hold any water given that we have analyzed once applied the provisions of section23(3) of the Limitations of Actions act and the guidance of the Courts in the several authorities, at the same time, it is noted that the time of filling the suit started shifting from 1999 to 2021 when payment was made. That being the case, the Claimant/Respondent did not require to obtain leave from the Tribunal to file this suit because the time has not lapsed. We therefore find that the ground of lapse of statutory period to file the suit is not merited and we therefore disallow.

26. On whether this Tribunal has jurisdiction or not to entertain the Claimants suit. First, it is a well settled principle of law that the issue of jurisdiction is crucial and every time it is pleaded it must be dispensed with at the earliest opportunity. In the case of ‘owner of the Motor Vessel ’Lillian’s’ (supra) it was held that,“Jurisdiction is everything, without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction”.

27. The Respondent/Applicants challenge the Tribunal to entertain the instant suit on the basis of lack of jurisdiction due to the legal grounds that they have raised. First, at all times on matters of jurisdiction, the Co-operative Tribunal is clothed with jurisdiction under the provisions of Section 79(5) of the Co-operative Societies Act Cap 490 which provide as follows:“The Tribunal shall have unlimited geographical and pecuniary jurisdiction in matters of cooperative disputes”

28. The cooperative dispute here is a claim of a sum of money by the Claimants/Respondents which is being denied by the Respondents/applicants. Section 76(1) of the Cooperative Societies Act cap 490 provides that;‘If any dispute concerning the business of a cooperative Society arises;a.Among members, past members and persons claiming through members, past members and deceased members; orb.Between members, past members or deceased members, and the society, its committee or any officer of the society; or(c)between the Society and any other Cooperative Society it shall be referred to the Tribunal (emphasis ours)From a plain reading of the Respondents/applicants preliminary objection on our jurisdiction, its interpretation does not mean that the Tribunal lack jurisdiction to hear the suit but because of the legal grounds raised, the Respondents/Applicants are of the opinion that the Tribunal should not entertain the suit.

29. A read through the Respondent’s witness statement dated 7. 11. 2023 filed on 26. 1.2024 raises weighty substantive matters such as the existence or non-existence of a sale agreement dated 9. 8.1999 between the Claimants/Respondents and the Respondents/applicants the issue of donation of Plot No. LR. Nyeri/Municipality Block 111/91 by Kenya National Union of Teachers Nyeri branch to the Respondents/applicants the transfer and registration of the Title, the misrepresentation and concealment of material facts by the Claimants/Respondents which made Respondents to pay a total of Ksh.550,000/- through cheques on various dates upto 2. 5.2023, the registered charge upon the property among many other issues.

30. It should be appreciated that justice can only be rendered expeditiously and fairly between the Respondent/applicant and the Claimants/Respondents in this suit if the issues raised are tested through cross-examination on hearing. This can only happen when the Tribunal set the suit for hearing.

31. Having found that ground one(1) and ground two(2) of the Preliminary Objection are not merited, we further find that ground three (3) has no legs to stand on and we therefore dismiss it for lack of merit.

32. The upshot of the foregoing is that we find the Respondent/applicants Preliminary Objection application dated 7. 11. 2023 to be without merit and dismissed with costs in the cause. We further direct that the suit proceed to full trial to ascertain the merits or demerits of the case before judgement is rendered.Mention for Pre-trial directions on 10. 4.2025.

RULING 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 MutaiGitau Kahiga advocate for the RespondentOjuok advocate holding brief for Modi Advocate for the Claimant.