[2023] KECPT 779 (KLR)

Solution Savings & Credit Cooperative Society Ltd v Mugambi & another (Tribunal Case E991/CTC914 of 2022) [2023] KECPT 779 (KLR) (31 August 2023) (Ruling)

Neutral citation: [2023] KECPT 779 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case E991/CTC914 of 2022

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

August 31, 2023

Between

Solution Savings & Credit Cooperative Society Ltd

Claimant

and

Jane Karimi Mugambi

1st Respondent

Aloise Njoroge Wanjira

2nd Respondent

Ruling

1. The Claimant filed an Application dated 15th November 2022. The Application is brought under the following orders; -a.Spentb.That this Honorable Tribunal be pleased to issue a temporary order for inhibition, inhibiting the registration of any dispositions, transfer, charge or dealings of any nature over LR No Gatarakwa/Gatarakwa/Block IV/268 pending the hearing and determination of this application inter-partes and thereafter as the Tribunal shall order.c.That this Honorable Tribunal be pleased to issue a temporary order of injunction restraining the 1st and 2nd Respondents herein from disposing off, transferring, charging, selling subdividing, leasing out or in any other manner whatsoever interfering with the title to LR No Gatarakwa/Gatarakwa/Block IV/268 pending the hearing and determination of this application inter-partes and thereafter as the Tribunal shall order.d.That this Honorable Tribunal be pleased to issue a temporary order for inhibition, inhibiting the registration of any dispositions, transfer, charge or dealings of any nature or the making of any entries over LR No Gatarakwa/Gatarakwa/Block IV/268 pending the hearing and determination of this claim.e.That costs of this application be costs in the cause.

2. The Application is supported by 6 grounds among them being that as per the Loan Agreement between the 1st Respondent and the Claimant, LR No Gatarakwa/Gatarakwa/Block IV/268 became the Principal Security for the loan amount and as such the Claimant holds a lien over the land and the original title deed thereof is in possession and custody of the Claimant,

3. This Application is supported by a Supporting Affidavit of Daniel K. Marete the Chief Executive Officer at Solution Sacco Society. The Claimants further, filed a Supplementary Affidavit sworn on 25th May 2023 to which he stated that the Respondent’s preliminary objection dated 19/12/2022 raises no valid or sustainable objections that override the Claimant’s case.

4. The 2nd Respondent filed a Replying Affidavit dated 10th January 2023 and claimed that the Claimant’s Application is frivolous, vexatious, a sham without any basis in law and fact only meant to circumvent the process of the law, the same should be dismissed with costs. She claims that the suit as filed herein is bad in law as this Tribunal lacks jurisdiction to hear and determine issues raised in the suit and particularly the Application. The 2nd Respondent further states that as advised by her advocates, she believes the Environment and Land Court has jurisdiction to hear and determine matters especially rights over land. She claims that she does not understand how her land is subject to the matter herein because she is not privy to the contract and transactions subject herein. That the suit land is neither charged nor registered for the purposes of loan issues raised by the Claimant.

5. The 2nd Respondent further claims that the land parcel LR No Gatarakwa/Gatarakwa/Block IV/268 is her property to the exclusion of any other person which property is not subject to the loan transaction in question. That without prejudice to the foregoing the palliation has no basis for the orders sought because the applicant has not demonstrated whether she has ever attempted to dispose, transfer or sell her property otherwise the Applicant is put to strict proof thereof.

6. The 2nd Respondent claims that without prejudice to the foregoing the Claimant and the deponent colluded and unlawfully terminated the employment of the 1st Respondent in late 2018 without any legal basis. Further, the 1st Respondent went to court and the Honorable Court in Meru ELRC No. E032 OF 2021 found in fact and law that the Claimant unlawfully and unfairly terminated the employment of the 1st Respondent. The unlawful termination was castigated by the Chief Executive Officer, Daniel Marete (the deponent in the Supporting Affidavit) after the 1st Respondent exposed a fraudulent theft syndicate where the Chief Executive Officer and other parties were discovered to have siphoned over Kshs. 5. 100,000/=from the Claimant. That the Claimant, the Chief Executive Officer and the Board of directors collude and covered up for the Chief Executive Officer who was not charged like the rest of the culprits of the syndicate. Further, that due to the whistle-blowing of the theft, the Chief Executive Officer has sworn to victimize the 1st Respondent by all means including weaponizing the Claimant. That before the termination of the 1st Respondent was diligent in repaying the said loan facility without any default as can be seen in DKM3 tot the application. That further the suit is maliciously instigated by the Chief Executive Officer because there is nothing on record showing a resolution or authorization by the Claimant’s members or board directors authorizing the suit or appointing the firm of advocates to institute the suit as require by law.

7. The Respondents further raised a Preliminary Objection through a Notice of Preliminary Objection dated 19th December 2022 on the grounds that:a.The suit is res judicata Meru ELRC No. E022 of 2021in light of section 7 of the Civil Procedure Act Cap. 21b.The tribunal has no jurisdiction to hear and determine dispute over rights in Respondents who are not members of the Claimant.c.That the tribunal has no jurisdiction to hear and determine dispute over rights in land as per section 13 of the Environment and Land Court Act.d.There is no resolution or valid resolution of the Claimant appointing the institution of this suit.e.There is no resolution or valid resolution of the Claimant appointing M/S Mithga & Kariuki Advocates to institute this suit for and on behalf of the Claimantf.This suit is statutory barred as per section 37 of the Cooperative Societies Act.g.The suit as filed does not disclose a reasonable cause of action against the 2nd Respondent thus, is vexatious, frivolous and an abuse of court’s process contrary to order 2 rule 15 of the Civil Procedure Rules.h.The suit is materially defective and incompetent in light of the foregoing statutes and the same ought to be dismissed or struck out forthwith with costs.

8. The Respondents/Applicants filed their written submissions dated 26th April 2023. The Claimants failed to- file their written submissions.

9. The issues for identification are thus; a. Whether the Tribunal has jurisdiction. 10. The Cooperative Tribunal hears matters highlighted under Section 76 of the Cooperative Societies Act. Such disputes include disputes among members, past members and persons claiming through members, past members and deceased members, or between members, past members or deceased members, and the society, its Committee or any officer of the society, or between the society and any other co-operative society.

11. The 1st Respondent herein is and has always been a member of the Claimant. The said membership has never been terminated by the Claimant nor the 1st Respondent. The 2nd Respondent is not a member but he is enjoined into these proceedings as a person of interest by virtue of him having been registered as the owner of LR No Gatarakwa/Gatarakwa/Block IV/268 which was purchased by the loan facility granted to the 1st Respondent by the Claimant, and which loan amount is now the subject of the proceedings herein.

12. Trusted Society of Human Rights Alliance v Mumo Matemu & 5 Others [2014] eKLR defined an Interested Party as one who has a stake in the proceedings, though he or she was not party to the cause ab initio. He or she is one who will be affected by the decision of the Court when it is made, either way. Such a person feels that his or her interest will not be well articulated unless he himself or she herself appears in the proceedings, and champions his or her cause.

13. Therefore, the Tribunal has jurisdiction because the 1st Respondent is a member of the society and the 2nd Respondent is an interested party by virtue of him having been registered as the owner of LR No Gatarakwa/Gatarakwa/Block IV/268, which land was used as collateral.

14. In addition, the claim herein is purely for recovery of an unpaid loan amount to a society and it is not a claim for land or land use, ownership or occupation or at all. Therefore, the same falls under the jurisdiction of this Honorable Tribunal as per section 76 of the Cooperative Societies Act and not theEnvironment and Land Court Act as the Respondents claim.

b. Is the claim res judicata as alleged in the Preliminary Objection?The doctrine of res judicata is set out in the section 7 of the Civil Procedure Act which states that “ no court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them can claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court.” 15. In essence therefore, the doctrine implies that for a matter to be res judicata, the matters in issue must be similar to those which were previously in dispute between the same parties and the same having been determined on merits by a Court of competent jurisdiction. In this case, the claim is purely for payment of a loan amount given to the 1st Respondent by the Claimant and which the 1st Respondent has refused to pay back as per the Loan Agreement. However, in Meru ELRC No. E022 of 2021 the 1st Respondent sued the Claimant for an alleged unlawful termination of Employment. The issues were restricted to Employment and labor issues only and no other issues were raised before the court. Therefore, the matters in issue are not similar to those which were previously in dispute between the same parties hence the claim is not res judicata.

c. Whether the Respondent has established a proper basis for the grant of a temporary injunction. 16. It is common ground by both parties that for one to succeed in an Application for the grant of a temporary injunction, one has to satisfy the conditions set out on the case of Giella v Cassman Brown & Co. Ltd [1973] E.A. 358 namely;1. A prima facie case with a probability of success.2. Irreparable harm3. Balance of convenience.

17. The above principles were also highlighted in the case of Robert Mugo Wa Karanja v Eco bank (Kenya) Ltd & Another [2019] eKLR where the court stated that Applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless the Applicant might otherwise suffer irreparably injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide on Application on a balance of convenience.

Prima Facie Case 18. The court in the case of Nguruman Limited v Jan Bonde Nelson & 2 Others [2014] eKLR defined a prima facie case to mean;a case in 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 to call for an explanation or a rebuttal from the latter”.

19. The Claimant claims that the 1st Respondent applied for and was granted a land loan by them in January 2016 in the sum of Kshs. 3,000,000 and the loan funds were utilized to purchase LR No Gatarakwa/Gatarakwa/Block IV/268 which is registered in the name of the 2nd Respondent and who is the husband to the 1st Respondent. Further, the 1st Respondent and the Claimant, entered into a Loan Agreement where the said land parcel became the Principal Security for the loan amount and as such the Claimant holds a lien over LR No Gatarakwa/Gatarakwa/Block IV/268 and the original title deed thereof is in possession and custody of the Claimant having been so surrendered to the Claimant as security by way of simple deposit of title.

20. The Claimant claims that the 1st Respondent has since the month of April 2019, or there around defaulted in her loan repayments and has since then failed, ignored, refused and/or neglected to make any payments towards settlement of the said loan amount and presently the outstanding total loan balance stood at Kshs. 2,080,420. 54/= as at 25/10/2022 and the same continues to accrue interest until payment is made in full.

21. Therefore, the 1st Respondent has not honored her part of the obligation in the Loan Agreement. She has not repaid the loan amount and as such the Claimant holds a lien over LR No Gatarakwa/Gatarakwa/Block IV/268. The Claimant has therefore, established a prima facie case with a probability of success. In addition, the Applicant might otherwise suffer irreparably injury, which would not adequately be compensated by an award of damages. Further, the balance of convenience lies in favor of granting the Application.

Irreparable injury/harm 22. The Court in Nguruman Limited v Jan Bonde Nelson & 2 Others [2014] eKLR the Court of Appeal held that only establishing prima facie case, is not sufficient to grant interlocutory judgement, the Court must further be satisfied that the injury suffered is irreparable. This is an injury that is actual, substantial and demonstratable. An injury is such nature that monetary compensation will never be adequate remedy.

23. As stated by the Claimant, unless an injunction is issued the Respondent will dispose off the said parcel of land, which land was used as collateral, and transfer the same to third parties. The Claimant demonstrated that he would suffer irreparable damage if the parcel of land is sold to third parties.

Balance of convenience 24. Since the Claimant has more to lose the balance of convenience therefore, tilts in their favour.

d. Whether the applicant is entitled to an order of inhibition. 25. Section 68 of the Land Registration Act of 2012 provides that the court may make an order referred to as an inhibition, inhibiting for a particular time, or until the occurrence of a particular event, or generally until a further order, the registration of any dealing with any land, lease or charge.

26. The Claimant has demonstrated that the 1st Respondent was granted a loan amount by the Claimant used to purchase LR No Gatarakwa/Gatarakwa/Block IV/268 and that the said parcel, became the Principal Security for the loan amount. However, the 1st Respondent has defaulted in her loan repayments and the same continues to accrue interest until payment is made in full. It would be in the interest of justice to preserve the subject matter of the case.

e. Who should meet the costs of the Application? 27. Costs shall be provided by the Respondents.

Upshot 28. We enter judgement in the following terms;a.The Preliminary Objection dated 19th December 2022 is found to be without merit and as such dismissed with costs to the Claimant.b.Application dated 15th November 2022 is allowed in terms of order number 3 pending hearing of this Suit.c.The Respondent to file and serve their Statement of Defence, Witness Statements and List of Documents 14 days from today.d.Claimant to file and serve Supplementary documents if need be 7 days upon service.e.Mention for Pre-Trial Directions on 11th December 2023 Notice to Issue.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 31ST DAY OF AUGUST, 2023. HON. BEATRICE KIMEMIA CHAIRPERSON SIGNED 31. 8.2023HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 31. 8.2023HON. BEATRICE SAWE MEMBER SIGNED 31. 8.2023HON. FRIDAH LOTUIYA MEMBER SIGNED 31. 8.2023HON. PHILIP GICHUKI MEMBER SIGNED 31. 8.2023HON. MICHAEL CHESIKAW MEMBER SIGNED 31. 8.2023HON. PAUL AOL MEMBER SIGNED 31. 8.2023TRIBUNAL CLERK JEMIMAHMiss Kajuju holding brief for Ms. Thagich for the RespondentMithega & Kariuki advocate for Claimant- no appearanceRuling as delivered on 31. 8.2023**Hon. Beatrice Kimemia Chairperson Signed 31. 8.2023