[2021] KECPT 598 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 273 OF 2016

CONSOLIDATED WITH CTC.NO.253/2010

SOT TEA GROWERS RURALS CO-OPERATIVES SAVINGS

AND CREDIT SOCIETY LIMITED & 10 OTHERS ..........CLAIMANTS

VERSUS

ZAKAYO SANG & 9 OTHERS .............................................RESPONDENT

RULING

What is before us for consideration and determination are the Respondent’s applications dated 6. 12. 2019 and 16. 12. 2019 respectively and the claimant’s Notice of Preliminary Objection dated 9. 3.2020. We will first consider and make a determination on the Notice of Preliminary Objection (PO) before we embark on the Respondents two – Applications.

Notice of Preliminary Objection

Vide the Preliminary Objection dated 9. 3.2020, the Claimants want the two Applications as well as the consolidated claims be struck of because of the following reasons:

1. That the Honourable Tribunal does not have jurisdiction as a similar claim had previously been submitted to the High Court and the consult entered on 11. 10. 2017;

2. That the Respondents have nolocus standito file suit on behalf of the 1st Claimant;

3. That Justice Sergon decree dated 6. 4.2018 cannot be enforced as it conflicts a consent order dated 11. 10. 2017 before Justice G.U.Odunga.

4. That the Respondents are no longer officials of Stegro EPZ Company Limited on account of a decree dated 22. 11. 19 by Justice Dulu;

5. That the Commissioner for Co-operative Development has wrongly been enjoined as a party;

6. That the subject Notice of Motion has been renderedres judicata;

7. That the matters in issue herein are substantially the same matters in issue in an Application for review made in HCA NO. 560/2016;

Parties canvassed the Notice of Preliminary Objection by way of written submissions. The Respondents filed their submissions on 17. 3.2020 while the Claimants filed theirs on 6. 11. 2020.

These submissions are also the consolidated submissions on both the Preliminary Objection and the Respondent’s Applications dated 6. 12. 2019 and 16. 12. 2019.

Claimant’s submission on the Preliminary Objection

The Claimants have submitted on the Preliminary Objection thematically as follows:

Orders against Stegro EPZ Tea Factory Company Limited

On this, the Claimants submitted that Orders cannot be sought against Stegro EPZ factory limited without it being enjoined as a party to the claim.

Jurisdiction

On jurisdiction, the Claimants contend that the Tribunal does not have jurisdiction to entertain disputes relating to shareholders of a private company. They referred to the provisions of Section 76of the Co-operative Societies Act (Cap 490) Laws of Kenya. They also relied on the decisions of the court in the cases of Ndimu -vs- Ndimu & Another (2008) EA 269 and Kimani Wanyoike - vs- Electoral Commission & Another (2008) eKLR, 43.

Orders against Commissioner of Co-operative Development

On this Claimants contend that the Tribunal does not have jurisdiction to direct the Commissioner of Co-operatives to undertake on inquiry. They cited the provisions of Section 58 of the Co-operative Society Act (Supra).

Res judicata

The Claimants submitted that this Tribunal does not have jurisdiction to adjudicate upon a matter in respect of which the same cause of action, the same subject matter and the same relief, had been canvassed and concluded. That this claim ( CTC 273/16) and CTC.NO.253/16) were substantially and directing dealt with in Judicial Review No.463 of 2017.

That the proceedings in the Judicial Review cause culminated into a consent order dated 11. 10. 2017. That the said consent settled with finally the issues relating to elections of the 1st Claimant and Stegro EPZ Tea Factory limited.

Respondent’s submissions on the Preliminary Objection

The Respondents submitted on the Preliminary Objection as follows:

Jurisdiction

On jurisdiction, the Respondents submitted that both the Claimants and the Respondents are members of the 1st Claimant. That therefore any dispute arising between them falls squarely within the rubric of 76 of the Co-operative Societies Act.

Locus standi

On the issue of authority or mandate to bring a claims on behalf of the 1st Claimant, the Respondents submit that they were legitimately elected into office and sued as such as CTC.NO. 253 of 2016. They thus submit that they have the requisite standing to originate a claim on behalf of the 1st Claimant.

Conflict on orders issued by the High Court

The Responses submit that there is no conflict between the Orders issued by Hon. Justice Sergon on 6. 4.2015 and Hon. Justice Odunga on 11. 10. 2017. That the orders of Hon. Justice Sergon arose from an Appeal against ex parte orders from the Tribunal while the orders of justice Odunga emanated from Judicial Review Application that was resolved amicably. That the orders of justice Odunga clearly separated the business of Stegro Sacco Limited from its investments through Stegro EPZ Tea Factory Limited.

Joinder of Commissioner of Co-operatives

The Respondents submit that the Commissioner of Co-operatives is a proper party in these proceedings as its office participated in the settlement of the disputes. That the orders sought in the Applications are directed at him.

Issues for determination

The Claimant’s Preliminary Objection has presented the following issues for determination:

a. Whether we have jurisdiction to entertain the Respondent’s Applications dated 6. 12. 2019 and 16. 12. 2019;

b. Whether the said Applications and the Claim is res judicata;

c. Whether the Respondents have the requisite standing to institute ; and

d. Claim on behalf of the 1st Claimant.

Jurisdicto

Jurisdiction is everything. Without it, a court of law downs its follow. This was the holding of the court in the celebrated case of owners of the motor vessel “ Lilian S”-vs- Caltex oil (Kenya) Limited [1989] KLR1. In the pertinent part, the court held thus:

“ 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 that it is without jurisdiction.”

With the legal principle in mind, and taking into account the matters raised by the Claimants, we pose the question as to whether we have jurisdiction to entertain the claim in its entirely or the Respondents Applications dated 6. 12. 2019and16. 12. 2019. We will look at the specific aspects of jurisdiction raised by the Claimants as follows:

Orders against Stegro EPZ Factory Limited

Vide prayer 5 of the Respondent’s Application dated 6. 12. 2019, the Respondent seeks the following orders:

“ That pending the hearing and determination of this suit, an order of injunction do issue restraining the 2nd to 11th Claimants from transacting in any bank accounts held and operated in the name of Stegro EPZ Tea Factory Limited..”

Clearly, this prayer seeks an order against a party(Stegro EPZ, Tea Factory Limited) which is not a co-operative Society. As such and pursuant to the provisions of Section 76 of the Co-operatives Societies Act, we do not have jurisdiction to make orders respecting and/or affecting the said party. To this end, we thus uphold the Claimant’s objection to this ends- and find that we do not have …..jurisdiction to entertain and/or make orders respecting prayers 3 and 4 of the Respondents Application dated 6. 12. 2019 and similarly, prayers 2 (6. 12. 2019)extent that it makes reference to Stegro EPZ Tea Factory Limited and prayer 3 of the Respondent’s Application dated 16. 12. 2019.

Res judicata

The Claimants contend that we do not have jurisdiction to entertain the claim and the Applications thereunder as the matters raised therein have been determined by the High Court vide the consent dated 11. 10. 2017.

We pause here and ask ourselves whether this contention raises a pure point of law so as to quality to be considered as a preliminary objection. In answering the question, we revert to the decision of the court in the case of Mukisa Biscuits Manufacturing Company Limited - vs- West End Distributors Limited [1969]EA 696 where in the pertinent part, the court held thus:

“ So far as I am aware, a Preliminary Objection consists of a point of law which has been pleaded, or which arise, by clear implication out of pleadings, and which it argued, as a Preliminary point, may dispose of the suit..”

It’s our finding that the matters raised by the Claimants regarding the binding nature of the proceedings in the High Court, do not face within the ambit of a preliminary objection as they raise and/or present factual issues which require investigation. We summarize the factual issues as follows:

a. In which cases and/or dispute wads the matters pending in the Tribunal determined?

b. What was the nature of the dispute in this cases?

c. What circumstances led to the entry and/or recording of the said consents?

These are matters which cannot be determined by way of a preliminary objection. To this end, we overrule the Claimant objection as far as the proceedings in the High Court in other matters relate.

Whether the Respondents have locus to institute claim on behalf of the 1st Claimant

Again we reiterates our findings above and hold that this contention does not raise a pure point of law to warrant our disposal as a preliminary point.

Joinder of commissioner of Co-operatives as a party

Similarly, we find that the issue of joinder of the commissioner of co-operatives as a party to the proceedings is a factual one and thus cannot be determined as a preliminary objection.

Conclusion

In the end, we find that the Claimant’s Notice of Preliminary Objection only succeeds to the extent that we do not have jurisdiction to entertain any claim or dispute as regards Stegro EPZ Tea Factory Limited

Respondent’s Application dated 6. 12. 2019 and 16. 12. 2019

Whilst these Application were filed separately, they substantially seek similar orders. We will thus consider and make a determination on the Application dated 16. 12. 2019.

Respondent’s Application dated 6. 12. 2019.

The Application seeks for the following orders .

1. Spent;

2. Spent;

3. Spent;

4. Spent;

5. Spent;

6. That in the interest of justice that the two consolidated cases be fast-tracked and a date given on priority basis on the Notice of Motion dated 26th May, 2016 as directed by Justice Sergon on 26th January 2018;

7. That this Honourable Tribunal be pleased to strike off the 5th Respondent REUBEN TERER(DECEASED) who has since passed on from the current proceedings.;

8. That this Tribunal be pleased to direct the 1st Claimant through the Commissioner for Co-operative Development to call for an urgent Special Delegates Meeting and/or Special General Meeting in accordance with Section 27(8) of the Co-operative Societies Act to solve, conclude and/or conduct elections of the 1st Claimant members within fourteen (14) days for and or in:-

a. Compliance with the law;

b. Failure by the 2nd to 11th Claimants to turn around the Sacco (1st Claimant) despite the 2017/2018 National Government Grant of Kshs.300,000,000/=;

c. Want of use and statutory returns of the foretasted Government Grant;

d. Purporting, acting and pretending to be a Sacco under SASRA yet it was deregistered in 2017;

e. Misuse and or failure to comply with the directive on use of the Government Grant as directed by the principal Secretary, Ministry of Trade, Co-operatives and Marketing vide his letter dated 27th March, 2018;

f. Compliance with the 1st Claimant’s By-laws.

9. That in the alternative this Honourable Tribunal be pleased to direct the 1st Claimant through the office of the Commissioner for Co-operative Development and or the Principal Secretary, Ministry of Trade, Co-operatives and Marketing to constitute a caretaker committee to conduct the affairs of the 1st Claimant and institute special inquiry on the performance, financial use and management and conduct of the 2nd to 11th Claimants pending the hearing and determination of the claim.

The Application is supported by the grounds on its face and the following Affidavits:

a. Supporting Affidavit sworn by Samuel Towett on 6. 12. 19; and

b. Supplementary Affidavit sworn by the said Samuel Towett on 21. 2.2020.

The Claimants have opposed the Application vide the Replying Affidavit sworn by the 2nd Claimant on 13. 2.2020.

As stated above, the Application was canvassed by way of written submissions jointly with the Claimant’s Notice of Preliminary Objection dated 9. 3.2020. The Respondent filed their submissions on 17. 3.2020 while the Claimants did so on 6. 11. 2020.

Respondent’s Contention

Vide the instant Application, the Respondents have accused the Claimants of violation of the 1st Claimant’s by-laws. That the Claimants have called for a special General Meeting stated to be held on 11. 12. 2019 without any basis.

That on 26. 7.2016, the Claimant obtained orders from this Tribunal barring 1st to 10th Respondents from making any transactions on behalf of the 1st Claimant. That they Appealed against the said decision and vide a Judgment delivered on 26. 1.2018, the High court quashed the said orders and remitted the Application which gave rise to the impugned Ruling back to the Tribunal for consideration.

That both parties subsequently held a meeting on 30. 8.2017 at the offices of the commissioner of co-operative Development with a view to resolving the governance and management issues. That at the end of the meeting, it was resolved that:

a. The 2nd -11th Claimants be in charge of Stegro Sacco Limited (1st Claimant; and

b. The 1st - 10th Respondents to be in charge of Stegro Tea Factory Limited;

c. That both parties would withdraw all cases facing the 1st Claimant and both lawyers to develop a consent for implementation.

That both lawyers for the parties had several meetings at the offices of the commissioner for Co-operatives Development and drafted suitable consents for filing.

That the 1st – 11th Claimants reneged and failed to adhere to the said resolutions and instead, reverted back to filing fresh suits thus precipitating re-emergence of Management and governance issues.

That there are subsisting court orders issued in Kericho ELC NO. 65/10 restraining against the opening of the factory and discussing any reports and affairs of Stegro EPZ Tea Factory Limited.

That in one of the consents agreed in Judicial Review No. 463/2017 the resolution of the meeting held on 30. 8.2017 were adopted as an order of the court. That the adopted consent was to the effect that:

a. The 2nd – 11th Claimants were appointed as the officials of the 1st Claimant in the interim pending elections to the held in Annual General Meeting;

b. The 1st - 10th Respondents were appointed the officials of Stegro EPZ Tea Factory Limited pending elections to be held in an Annual General Meeting;

c. That both teams were to mention the respective entities pending Special Annual General Meeting to elect new officials within 60 days.

That the 1st – 10th Respondents had proper Annual General Meeting on 7. 12. 2017 upon which Stegro EPZ Tea Factory limited filed returns with the Registrar of Companies.

That the Claimants subsequently held a sham election on 8. 12. 2017 contrary to the court orders where they purported to do the following:

a. Amend the 1st Claimants by-laws without the approval of the County Commissioner of Co-operatives;

b. Ensured that the process was skewed in favour of their continued holding office;

c. That the restraining orders in place against the 1st- 10th Respondents were used to disparage and discredit them;

d. That No subsequent Annual General Meeting has been held for the year 2019;

e. That No notice calling for the 2019 Annual General Meeting was issued in compliance with the provisions of Cap 490; and

f. That the 1st Claimant is no longer Gazetted as a Sacco and that the 2nd - 14th Claimants were barred and therefore the Claimant is misrepresenting itself as a Sacco.

g. That as a result of the debarment by SASRA the 2nd – 11th Claimant were ineligible to contend in any elections for any office of the 1st Claimant.

That the Claimants have therefore resorted to carrying out of the business of the 1st Claimant in unorthodox way without paying due regard to the by-laws resolutions and court orders.

Claimant’s case

Vide the Replying Affidavit sworn by Joseph Mabwai on 13. 2.2020, the Claimants have opposed the Application on the following grounds:

That whilst it is true that this Tribunal delivered a Ruling on 26. 7.2016 and the Respondents Appealing against I vide CA NO. 560/2016 on 3. 7.2016, the Respondents filed another suit in the High Court being Petition No. 360/16. That this was only a day after it had lodged the Appeal referred to herein.

That Civil Appeal No. 560/16 and Petition No. 360/2016 were dealing with the same subject matter.

That on 3. 11. 2016, the constitutional court dismissed the petition. That in doing so, the High court clarified at paragraph, 31 that the Claimants shall continue being the bonafide officials of the Claimant.

That some members of the 1st Claimant filed a constitutional petition at Kericho being Petition No. 8/17 together with an Application dated 12. 6.2017. That upon hearing of the said Applicant, the High Court granted the order sought.

That once Petition No. 360 of 2016 was dismissed, it implied that Civil Appeal No. 560 of 2016 ceased automatically. That the Judge in C/A NO. 560 was misled about the existence of the said Appeal. That as such, the High court gave contradictory orders.

That the commissioner for Co-operatives Development had instituted an inquiry into the operations of the 1st Claimant under Section 58 of Cap 490. That the report adversely mentioned the Respondents. That notwithstanding the findings of the inquiry the Respondents continued to hold office. That this continued stay prompted some members of 58 of Cap 490. That the report adversely mentioned the Respondents. That notwithstanding the findings of the inquiry the Respondents continued to hold office. That this continued stay prompted some members of the Claimant to instituteJR. NO. 463/17. That in the course of the said Judicial Review parties negotiated and recorded a consent before Justice Odunga. That this consent makes it difficult to enforce the orders of Justice Sergon.

That in view of the foregoing, the Tribunal is being dragged into re-opening of suits which have already been heard and determined by superior courts.

That it is on this basis that this Application should be struck off.

Respondents Supplementary Affidavit

Vide this Affidavit (sworn by the 8th Respondent on 21. 2.2020), the Respondents have rebutted the averments made by the Claimants vide the Replying Affidavit sworn by the 2nd Claimant on 13. 2.2020. the Respondents contend thus:

That the Ruling of Hon. Justice Sergon is not erroneous as it was a culmination of the Appeal they had filed challenging the ruling delivered by the Tribunal on 26. 7.16.

That as regards Pet. No. 360 of 2016, the Respondents contend that the same was not dealing with the same issues as those in CA NO. 560 OF 2016. That in any event, the court in Pet. NO. 360/16 did not stay proceedings before this Tribunal.

That it is true that JR. NO. 463/17 was compromised at the intervention of the Principal Secretary, State Department for Co-operatives.

The subsequently, Pet. NO. 8 and JR. NO. 463/17 were withdrawn by consent of the parties.

Issues for determination

The Respondent’s application dated 6. 12. 19 has presented the following issues for determination:

a. Whether this Tribunal has jurisdiction to entertain this claim and the Application thereunder in light of the decision of the court in Pet. No. 360 of 2016;

b. Whether this Application and the claim are res judicata in light of the consent order recorded in JR. NO. 463/17;

c. Whether the applicant has established a proper basis to warrant the grant of an order of temporary injunction.

d. Who should meet the costs of the Applicant.

Jurisdiction

As we have held above, jurisdiction is everything. Without it, we down our tools. The Claimants have invited us to down our tools on account of the fact that once the High court dismissed the Respondents Petition No. 360/16, C/A No. 560/2016 automatically stood determined. That it was erroneous for the court in Civil Appeal No. 560/16 to proceed to hear and determine the Appeal to conclusively make a determination on the issue, we will examine the nature of the claims in the two High Court matters and the ensuing orders. We will begin with Pet. No. 360/16. A copy of the petition is annexed to the replying Affidavit sworn by the 2nd Claimant on 13. 2.2020. the Petition is marked as annexture JM-3. The prayers in the petition are as follows:

a. An order directed at the 1st and 2nd Respondents barring them from implementing the inquiry order and the report made pursuant to Kenya Gazette No. 3686 dated 13. 4.16;

b. An order directed at the 2nd Respondent barring them from interfering with the Management and operations of the 2nd interested party to the detriment of its eighteen thousand members.

c. A declaration that the 2nd Respondent overstepped his mandate in there requirement of the 2nd Interested party and that this action, are ultra vines Article 174, and 575 of the constitution.

d. An a........ that the Ruling delivered on the 26. 7.2016 by the Co-operative Tribunal is of no effect null and voidabinitio and ought to be quashed in the interests of the members of the 2nd Interested party.

Vide a Ruling delivered on 3. 11. 2016, the High Court Justice Muriithi dismissed the petition with costs. In the pertinent part, the court held thus:

“Accordingly, for the reasons set out above, the court upholds the Respondent’s preliminary objection dated 29. 9.2016 and the Notice of motion dated the 26th August 2010 as well as the petition dated 26. 8.2016 are dismissed with costs to the Respondents and interested parties...”

Vide the preliminary objection dated 29. 9.16, the Claimants herein had objected to the petition on the grounds that the matters raised therein and in the Application accompany it (dated 26. 8.2016) were similar to those in CA NO. 560 of 2016.

While agreeing with the Claimants in the High Court said this at paragraph 15 of the Ruling.

“..I have perused the proceedings before the Tribunal the Appeal therefore to the High court in Civil Appeal NO. 560 of 2016 against the reliefs sought in this petition. It is clear that the subject matter in the three proceedings is the same.”

At paragraph 25, the court went ahead to find thus:

“...In seeking substantially the same orders in this petition as sought in the memorandum of Appeal in HCCA NO. 560/16, and without disclosing the fact that the Appeal filed the previous day, the petitioners were guilty of material non-disclosure. The Constitutional Division of the High Court has no supervisory jurisdiction over other division, of the High court, nor does it have a monopoly over the fundamental rights jurisdiction and such other divisions of the court, and courts of equal status may deal with any question of constitutional interpretation of rights and fundamental freedoms...”

What we discern from the holding of the court in petition No. 360/2016 is that the petition was dismissed summarily on account of the Respondent’s conduct of filing the petition while they had filed a substance Appeal the previous day. Nowhere did the constitutional court made definitive findings on substantive matters pending in CA NO. 560/2016 and the claims herein. We thus disagree with the Claimants contention that the matters in the instant application and the claim have been deterred by dint of the Ruling in petition No. 360/16.

Consent Orders in Judicial Review No. 363/2017

The Claimants also contend that the parties in the proceedings negotiated a consent in Judicial Review No. 463/2017 thereby compromising these proceedings and as such, the matters herein are res judicata. We have perused the order arising out of proceedings in Judicial Review No. 463/2017. We note that consent parties consented as follows:

a. Claimant’s herein to be officials of the 1st Claimant;

b. The Respondent’s herein to be the officials of Stegro EPZ Tea Factory Limited;

c. That both appointments were to be on interim basis pending elections which were to be held within 60 days.

We have perused the prayers in this claim(273/2016). Thus include:

a. Dissolution of officials elected on 15. 1.2016;

b. Recognition of officials elected on 28. 12. 15;

c. An order of permanent injunction do issue restraining the 4th - 13th Respondents from interfering transacting/or representing the Commissioner in any matter pertaining the Stegro Sacco Limited;

d. M.......the parties to resolve the dispute as provider ......under Article 47 of the by-laws;

e. Special General Meeting as provided under clause 24(1) is to resolve and conduct elections of any vacancy in the 1st Claimant’s Sacco within 14 days; and

f. An Order be issued compelling the Board members to comply with by laws of the Sacco.

Having compared the consent emanating from proceedings in Judicial Review No. 463/2017 vis-à-vis the prayers in this claim and the orders made in C/A NO. 560/16, we note that the main issues in contest revolved the leadership of the 1st Claimant and Stegro EPZ Tea Factory Limited.

While the court in CA NO. 560/16 quashed the proceedings of 26. 7.2016 in CTC. NO. 253/16, in the court in Judicial Review No. 463/17 adopted a consent which in our view, compromised the issues in controversy in CTC. NO. 253/16 and the current claim (CTC.NO. 273/10).

Whilst it appears that the Orders made in CTC.NO. 560/16 appears to contradict the ones made in Judicial Review No. 463/17, we have perused the same and note that the said orders do not conflict at all in CA NO. 560/16, the court was determining an Appeal which had been preferred against a Ruling in CTC.NO.253/16. The said orders do not have a negative impact to the proceedings in CTC.NO. 463/17 as in the said Judicial Review, parties voluntarily agreed on the mode of resolution of disputes pitting them. To the extent that they agreed to record a consent which affected the issues in CTC.NO. 253/10 and the current claim, we find that the orders in 560/16 were compromised by the said consent. What is material to us is the consent recorded in 463/17 as the same addressed, the substantive issues in CTC.NO. 253/16 and the current claim.

Our view, once the consent was adopted by the court in JR.NO.463/17, the matters in controversy in CTC.NO. 253/16 and the current claim (273/16) stood resolved. We do not therefore fathom the circumstances under which the Respondents are originating Applications on these matters.

Bearing this in mind, we therefore find that the Respondent’s Applications dated 6. 12. 2019 and 16. 12. 2019 are res judicata the order made on 10. 10. 2017 in JR. NO. 463/17.

The consequence of this is that the said Application have no legs to stand on.

Conclusion

The upshot of the foregoing is that we do not find merit in the Respondent’s Applications dated 6. 12. 19 and 16. 12. 2019 and hereby dismiss them with no orders as to costs.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 4TH DAY OF MARCH, 2021.

Hon. B. Kimemia Chairperson Signed

Mr. P. Gichuki Member Signed

Mr. B. Akusala Member Signed

Mengich advocate for Claimant/Applicant: Present

No appearance for Respondent

Hon. B. Kimemia Chairperson Signed 4. 3.2021