[2024] KECPT 1164 (KLR)

PCEA Ruiru Cooperative Savings and Credit Society Limited v a Union of Savings and Credit Cooperative Limited (Tribunal Case E226 (151) of 2024) [2024] KECPT 1164 (KLR) (25 July 2024) (Ruling)

Neutral citation: [2024] KECPT 1164 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case E226 (151) of 2024

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

July 25, 2024

Between

PCEA Ruiru Cooperative Savings and Credit Society Limited

Claimant

and

Kenya Union of Savings and Credit Cooperative Limited

Respondent

Ruling

1. The matter for determination is the Notice of Motion Application dated 14. 5.2024 seeking the following prayers:a.Spentb.That the Honourable Tribunal do vary its orders dated 19th April, 2024 and direct that the sum not exceeding Kshs. 95,041,018/= be deposited to the Honourable Tribunal pending the finalization of the suit.c.That in the alternative the Honorable Tribunal be pleased to issue summons to the Chairperson, Vice Chairperson and the Board of Directors of the Respondent to show cause why they should not be committed to civil jail for failing to comply with the orders of the Tribunal dated 19th April, 2024. d.That the Honourable Tribunal be pleased to commit the Chairperson, Vice Chairperson and the Board of Directors of the Respondent to civil jail for a period f six (6) months or for such period as the Tribunal deems fit for failing to comply with the orders of the court dated 19th April, 2024. e.That the Respondent be denied audience before the Tribunal until such a time as its directors and officials shall have purged their contempt by, inter alia:i.Complying with order 3 of the Honourable Tribunal’s orders dated 19th April, 2024. ii.Performing any such act as the Honourable Tribunal may in its discretion deem fit to order the Respondent to perform.

2. The Application is based on the grounds on the face of the Application and the supporting affidavit of Edward Ngarega Gacheru.The application is opposed vide Replying Affidavit of Paul Wanjala deponed on 1. 6.2024 and the Replying Affidavit of James Ole Nkiti and the 2nd Replying Affidavit deponed on 1. 6.2024.

Background Of The MatterThere was an Application dated 21. 3.2024 filed by the Applicant/Claimant and to which the Tribunal delivered a ruling dated 19. 4.2024 issuing the following orders:i.Spentii.That a temporary injunction is hereby granted restraining the Respondent and/or his agents from passing any resolutions during its Annual Delegates Meeting restricting the Claimant from withdrawing their investment and interest from them or from withdrawing their membership on any date until the hearing and determination of the suit filed.iii.That the parties herein do open a joint interest earning account in the names of the advocates for the Claimant and Respondent , and the Respondent do deposit a sum of Kshs. 95,041,018/= into the said account within 7 days herein.

3. The parties filed written submissions to dispense with the Application. The Claimants written submissions dated 13. 6.2024 and Respondents written submissions dated 24. 6.2024.

Issues For Determinationi.Whether the Respondent has failed to comply with the orders and is in contempt of the Tribunal and;Whether the applicant has proved contempt against the Respondent.ii.Who should bear the costs.

Issue OneWhether the Respondent has failed to comply with the orders and is in contempt of the Tribunal and whether the Applicant has proved contempt against the Respondent.

The Claimant’s Submissions 4. The Applicant in their submissions averred that on 19. 4.2024, the Cooperative Tribunal issued orders which required compliance within 7 days.

5. The orders were for the Respondent to deposit Kshs. 95,041,018/- into the joint interest earning account. That the parties opened an account but there was no money deposited into the account.

6. The Claimant cited:i.Kenya Human Rights Commonv Attorney General and Another [2018]eKLRii.Republicv County Government of Kitui ex parte Fair Plan Systems Limited [2022] eKLR and Hadkinusonv Hadkinson[1952] 2 ALL E’R56. The gist of the authorities is that it is the plain and unqualified obligation of every person against or in respect of whom an order was made by a court of competent jurisdiction to obey it unless and until it was discharged and disobedience of such an order would as a general rule result in the person disobeying it being in contempt and punishable by committal or attachment and in an application to the court by him not being entertained until he had purged the contempt.

7. That the Cooperative Society Act under Section 79 (2) (d) (ii) provides for the authority to punish any person who fails to obey orders.Section 83 Cooperative Society Act also provides for punishment of any person for contempt of the tribunal.That the respondent has failed to comply to the orders of the tribunal within the stipulated timelines and they had not appealed or sought review of the orders .That the orders issued are not meant for completic purposes and ought to be complied to strictly.

8. In TSCv KNUT & 2 Others Petition 23 OF 2013. It was held:“that the reason why courts will punish for contempt is in order to safeguard the rule of law as fundament in the administration of justice.”They also cited Republicv County Chief Officer Finance & Economic Planning NCC [2018] eKLR :The Claimant submitted that the Respondent be held in contempt for disobeying and disregarding the Tribunal’s orders.

The Respondents Submissions 9. The Respondent submitted that granting of contempt orders require a higher than regular standard of proof than civil cases as held in Githiga & 5 othersv Kiru Tea Factory Pet. 13/19[2023]KESC 41 eKLR.That in the above case, it was decided that the court must be fair and reasonable and give the full opportunity to the alleged contemnor to defend himself. That contempt proceedings being quasi -criminal require a higher standard of proof since the person can be committed to civil jail or penalized on the basis of the evidence, hence there should be no doubt as to the contemnor’s liability.

10. That the Respondent was unable to deposit the said amount into the joint interest earning account is not due to the Respondent’s willful and deliberate contempt but it is due to the dire financial situation as per the Replying Affidavit deponed on 1. 6.2024.

11. That the test for determining contempt of court was committed is whether the breach was deliberate or malafides as held in Frankel Max Pollak Vinderine Inc.v Menell Jack Hyman Rosenberg & Company INC.[1996]ZASCA 21 1996(3) SA 355 (A) (367)

12. That whether the contempt was deliberate, the court should determine whether the breach was intended. That the evidence of the Claimant does not prove that the breach was deliberate but that there was reasonable justification by the Respondent.

13. That in Samuel M.N Mweru & othersv National Land Commission & 2 others [2020]eKLR, the principles in proving contempt were stated as follows:i.The terms of the order were clear and unambiguous and binding to Defendantii.The Defendant had knowledge of or proper notice of the terms of the orderiii.The Defendant acted in breach of the terms of the orderiv.The Defendant’s conduct was deliberate.

14. The Respondent avers that the Respondents board was reconstructed and an interim board found by the Cooperative Society on 7. 5.2024. That the interim board therefore had no knowledge of the orders and there was no prove of service.

15. That there was no proof that the actions were deliberate and that the Respondent has an existing debt of 6, 166,460,317 to other Cooperatives and the compliance would have led all others to seek their share of investments leading to financial collapse of the Respondent

16. That the claimant has failed to prove the contempt of court hence the orders should not be granted.

i. That the terms of the order were clear.We have carefully considered the submissions of the parties and we note that the orders of the tribunal were very clear, unambiguous and binding on the respondent. There is no submission by either party to show that there was any mis-understanding, ambiguity or otherwise of the orders issued on 19. 4.2024.

ii. That the Defendants had knowledgeWe also note that the management board was replaced by the Cooperative Society on 7. 5.2024. We note that there was no evidence of service on the interim committee. However, the advocate on record for the Respondent has not charged and therefore the advocate had the responsibility to advise the interim committee on the status of the Respondent.That the Chief Operating Officer appealed and was ready and willing to stand in for the committee.We therefore in the circumstances note that there was knowledge and proper notice of the terms of the order, noting that the Respondent was represented by an advocate who is still on record.

i. That the Defendants acted in breach of the terms of the orderThe Claimant submitted that they opened the joint interest earning account, however, there was no money deposited into the account in compliance of the orders of 19. 4.2024. 17. The Respondent has submitted that there is an issue of financial constraints of the respondent since the bank accounts of the Respondent are overdrawn into the negatives and any action made by the Respondent to deposit the funds would severely cripple the activities of the Applicant.

18. The Respondent produced the bank statements through Replying Affidavit dated 1. 6.2024.

19. That the Respondent’s actions were therefore not deliberate in the circumstances.

20. We have considered the written submissions of the parties in regard to the issue. Its clear that the parties opened a joint interest earning account but the respondent did not deposit any money onto the account as per the order of the Tribunal of 19. 4.2024.

21. We note that there has been alleged that the action of the Respondent was not deliberate but it was due to financial constraints of the Respondents.

22. The interim orders in this Application were issued for the Respondents to appear and show cause as to why they should not be held in contempt. We note that the interim board members did not appear to show cause.

Decision On Issues (I) &(II) 23. The Respondents avers that the failure to comply to the orders were not deliberate , however, we note that the averments are neither here nor there. The Respondents were aware of the orders of the Tribunal and indeed they have opened the joint interest earning account. However, the completion of fulfilment of the orders of the Tribunal has not been proved.

24. We note that the test of proving the contempt of the respondent has been proved as required in the test Samuel M.N.Mweru & others case (Supra).

25. The Respondent have not complied to the orders that were issued by this Tribunal on 19. 4.2024.

26. Having found as above, we note that the question we need to answer is on what actions to be taken in regard to the non-compliance, and noting the financial constraints of the Respondent as alleged.

27. We note that the Respondent is the mother body/union of the Cooperative Societies. We note that this is a matter with great public interest by the Cooperative Societies nationally.

28. By the time of writing this ruling, the parties have already been heard inter-parties and the matter is pending the confirmation of the written submissions of the parties.

29. In essence, the Respondents have failed to comply to the orders issued on 19. 4.2024. there is no reasonable explanation given as to why there has been no compliance of the law orders. There is no appeal filed in regard to the said orders.

30. The Respondents have submitted about the right to fair trial as provided for in the Constitution of Kenya Article 50. However, both parties have called their evidence and closed their cases but are yet to file written submissions in the main claim for purposes of the determination of the matter.

31. Having considered the pleadings, the Affidavits and written submissions of the parties, we find that the Respondents have failed and/or neglected to comply to the orders of the Tribunal issued on 19. 4.2024.

32. The Respondents have urged the tribunal to consider the decision of Republicv Kenyatta University ex parte Losem Naomi Chepkemoi [2019] eKLR on guarding of the public interest. We have noted this matter and in that regard, we therefore order as follows:a.The orders of 19. 4.2024 are hereby upheld hence prayer (2) of the Notice of Motion fails.b.The Chairperson, Vice- Chairperson and the Board of Directors of the Respondents are hereby ordered to show cause as to why they should not be committed to civil jail for failure to comply to the orders of 19. 4.2024. Summons to issue accordingly to Interim Chairperson, Vice -Chairperson and the Interim Board of Directors of the Respondent.c.Prayer 5 failed.d.On the issue of costs, we hereby order for the costs of the application be in the cause.e.Mention on 8. 8.2024. f.Judgment on 26. 9.2024.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 25TH DAY OF JULY, 2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 25. 7.2024HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 25. 7.2024HON. BEATRICE SAWE MEMBER SIGNED 25. 7.2024HON. FRIDAH LOTUIYA MEMBER SIGNED 25. 7.2024HON. PHILIP GICHUKI MEMBER SIGNED 25. 7.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 25. 7.2024HON. PAUL AOL MEMBER SIGNED 25. 7.2024Tribunal Clerk JemimahJoshua Kamau advocate for RespondentMs. Wainaina advocate for Claimant:Matter is to confirm written submission we filed and served and we have received the written submissions of Respondent, we pray for a judgment date.Order: The parties to avail physical copies of the written submissions.Judgment on 26. 9.2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 25. 7.2024On ruling on Application dated 14. 5.2024Joshua Kamau- I pray for leave to Appeal against the ruling and 30 days stay of execution against the Ruling.Ms. Wainaina for Claimant: The Respondent should first show cause why before the Appeal.Joshua Kamau for Respondent: We will take a date for the showing cause of the summons before we file for the Appeal.Order: Further mention on 8. 8.2024 physically for the showing of cause of the Board of Directors.HON. B. KIMEMIA CHAIRPERSON SIGNED 25. 7.2024