Betty Joyce Matianyi v Wevarsity Sacco Society Ltd [2021] KECPT 507 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL APPEAL CASE NO.2 OF 2020

BETTY JOYCE MATIANYI………………................................... APPELANT

VERSES

WEVARSITY SACCO SOCIETY LTD……………….............RESPONDENT

JUDGMENT

The matter for determination is an Appeal filed by the Appellant vide an Appeal dated 28/7/20 on the grounds that :

i. The Commissioner erred in both Law and fact issuing a surcharge order against the Appellant when the same issue was well canvassed and settled in claim No.352 and 180 of 2019 respectively.

Parties filed their Written Submissions and documents. The Appellant filed their Written Submissions dated 9/2/21 on 17/2/21 and the Respondents filed Written Submissions on 9/2/21.

Appellant’s  submissions

1. The Appellants submitted that they preferred their appeal against an inquiry report of the Respondent and Surcharge order dated 26/2/20 made by the Commissioner of Co-operatives.

The Appellant submitted  that  the court should take judicial notice that she had earlier gone to court seeking refund of her deposit vide her Claim in CTC 180 of 2019. The Respondent filed another case CTC 352 OF 2019 for repayment of an amount  Kshs.1,955,227. 10/= which  was a ‘misappropriation’.  Later on, the parties therein recorded a consent in respect of both claims.

The Appellant submitted  that the surcharge order dated 26/2/20 was not presented before court as the consents were being recorded for adoption by court but later surfaces later on. "The Respondent were all the while in possession of said inquiry report and Surcharge Order.

The Appellant relied on ET –VS-ATTORNEY GENERAL & ANOTHER (2012) eKLR

“The courts must always be vigilant to guard against litigants evading the doctrine of res judicataby introducing new causes of action so as to seek the same remedy before the court. The test is whether the plaintiff is in the second suit is trying to bring before the court in another way and in a form a new cause of action which has been resolved by a court of competent jurisdiction. In the case of Omondi v National Bank of Kenya Limited and Others[2001] EA 177the court held that, ‘parties cannot evade the doctrine of res judicata by merely adding other parties or causes of action in a subsequent suit.’In that case the court quoted Kuloba J., in the case of Njangu v Wambugu and AnotherNairobi HCCC No. 2340 of 1991 (Unreported)where he stated, ‘If parties were allowed to go on litigating forever over the same issue with the same opponent before courts of competent jurisdiction merely because he gives his case some cosmetic face lift on every occasion he comes to court, then I do not see the use of the doctrine of res judicata ....’

That this appeal is merited in line with provisions on Section 74(1) CSA and that it should be allowed.

Respondent’s  Submissions

2. The Respondent in their Submissions gave a brief background of the Appellants stating she was employed by the Respondent on 1/11/2011 as an accountant and rose up he ranks of acting manager as at 4/6/2012. In between there were financial irregularities and cash shortages which prompted the Respondent to question her.

The Appellant was suspended on 7/7/14 over professional misconduct and subsequent before she could resume work. She resigned vide a letter dated 31/7/14.

She made commitments to refund the shortage dated  1. 7.2014 for kshs.1,841,428/-, however, she further  wrote   a letter  dated  16. 9.2014 for  the amounts  to be deducted  from  her salary at Kshs.50,000/= per month she  did not keep  her commitment.

3. The Respondent was thus compelled to engage the Commissioner for Co-operatives to investigate the matter alongside the several operations  of the society and she was given opportunities to defend herself and  an intention  to surcharge  was issued  on 27. 3.2017 and surcharge  order  on  26. 2.2020, an inquiry was done.

The Respondent therefore submitted  that the surcharge order dated 26/2/20 was properly issued.

ISSUES FOR DETERMINATION

1. Res Judicata

2. Merits of Appeal

3. Costs

ISSUE ONE

1. RES JUDICATA

4. Section 7 of the Civil Procedures Act provides:

“ a suit will be Res Judicata if the matter has been directly and substantially in issue in a former suit between the same party or parties under whom they or  any  of them claim,  litigating  under  the same  file 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.”

Question: What were the issues in CTC 180 OF 2019 and CTC 352 of 2019?

We note that the Appellant has not availed certified copies of proceedings and /or copy of the Consent that guided them to compromise the two cases cited above despite the same being in (index page of table of document).

However,  we note that the  Respondent’s  list of  documents  filed the statement of  Claim in  352/19. The claim  is for  “repayment  of the principal  sum as particularized  at paragraph  6  (paragraph  6 Repayment  of the entire  sum Kshs.1,955,277. 10)” among  other prayers  for interest  on the  amount.

The matter CTC.NO.180/19 is allegedly  for refund  of the savings  of the appellant.

The appellant  indicated  that consents  were entered  into and the 2 suits  were compromised. We are  however,  not told  the terms  of the consents  and to what  extent  the matter was compromised nor the  date  of  the said  consents.

We note  that the surcharge  order was issued  on 26. 2.2020, yet the  suit  that was  compromised  was filed  on 19. 12. 2019. we therefore  reasonably note that  the said  surcharge  order was  not  the  issue in the  2 suits  filed before  the said  surcharge  order was  issued.

The process  leading  to a surcharge  order  is clear under  Section 58  Co-operative  Societies  Act

The process  of a surcharge  order is  a process  provided  for under Section  58  Co-operative  Societies  Act which  provides  that:

(i)   The Commissioner  may  of his own  accords shall  on direction  of Minister  as  the  case be hold an inquiry  or direct  any person  authorized by  him in  meriting  to hold  an inquiry  into the  by-laws,  working and financial  conditions  of any Co-operative  society.

(ii)  The commissioner  shall report  findings  of his  inquiry  at the  General  Meeting  and shall give directions for the implementation  of the  recommendations  of inquiry  report.

Section  73  Co-operative Society Act provides  that where it  appears  that any  person.. the Commissioner  may on  his  own accord  or on the Application  of the liquidator  or  of any creditor or member inquire  into the  conduct  of such  person....

Upon  inquiry  under sub Section  1 the Commissioner  may  if he considers  it appropriate  make  an order  to repay  or restore  the money  or property ..as  the Commissioner  deems  just.

10. The Commissioner  therefore  is an administrative  body  which  carries  out its  function  as mandated  under the Co-operative  society  Act. Ruling the  process of  inquiry, leading to surcharge  order  the affected  parties  are notified  of the process  and accordingly invited  to challenge  the process. Indeed  after an inquiry  report  is completed  it is presented  to  the  General  meeting  of members  for discussion, nothing  prevented  the appellant from raising  any issue/objection in regard  to the inquiry report at that  stage.

Indeed  the extension  of the inquiry   report  was extended  to  28. 2.2015 as per  the notice  issued  by the Commissioner on 15. 12. 2014  and on  13. 7.15  the Respondent  wrote  to the Appellant demanding  for payment  of the lost  money  and he was granted  14 days to do so.

After  the adoption  of the inquiry  report in the General  meeting a notice  of intention  to surcharge  under section  58  and  73  Co-operative  Societies  Act was issued  to the Claimant and six others  vide  Notice  of  intention  dated 27. 3.2017.

11. The Appellant  was granted  the opportunity  to show  cause why  he should  not be surcharged  as per the  unanimously  adopted  findings  and recommendations  of the inquiry report.

No such  cause  was shown within  the 14 days  window a Surcharge  Order was therefore  issued on  26. 2.2020. The Process  taken  or carried  out by  the  Commissioner  is and administrative  process  which  parties  are granted  audience  to air  or challenge the process  and if the  parties  are not satisfied  with the administrative  process  they have  a right  to file a  Judicial Review  in the High  Court  under  the Administrative  Action  Act.

Once  the Surcharge  Order is  issued  then the party  is  required  under  Section  74  (1)  Co-operative  Societies  Act  to appear  against  the  said  order within  30 days to the Tribunal.

The  only avenue  after  the surcharge  order  was issued  was an appeal  against  the Surcharge Order under  Section  74 (1)  Co-operative  Societies  Act.

We note  that the  matters directly and substantially in issue in  the  2 matters  are not the same  issues in the surcharge order was issued on 26. 2.2020. The Commissioner  co-operative Development being an  administrative  body  is neither  a court nor a  Tribunal as enumerated  in the  Res judicata principle.  Indeed nothing presented  by the appellant  indicates  that the appellant  indicates. That the appellant  raised  the issue  of the  2 suits  before  the Commissioner. The appellant  issued a letter  of commitment  to repay  the amount Kshs.1,841,428/= on 1. 7.2014 and during  the inquiry, the appellant  was granted  the opportunity  to  participate  in the process.

The surcharge  order was  issued  after the  suit was  filed and therefore could  not have been  the issue in the said  2 suits.

This is  in light  of the fact that  the contents  of the said  consents were not  availed. Its trite  law that  a party  alleging an act  insist  prove  that fact  and in  this case,  no details  of the consents were  availed.

If indeed  the appellant  was aggrieved  by the inquiry, they  should have  moved  the  High court in a petition for Judicial  Review.

2. ISSUE TWO

MERITS OF THE APPEAL

Section 58 and 74 of the Co-operative Societies Act provides:

“ for the issuance of inquiry and surcharge orders.

The procedure for filing an Appeal in the Co-operative Tribunal is provided for under Rule 8 of the Co-operative Tribunal Rules 2009, sub rule 2. ”

The Mandatory documents to be filed with the Memorandum of Appeal are;

i. Memorandum of Appeal

ii. Inquiry Order

iii. Inspection Order

iv. Minutes of General Meeting

v. Notice of intention to Surcharge

vi. Surcharge Order

The provisions are in regard to Appeal’s against surcharge orders as enumerated under Section 7 of Co-operative Societies Act which is the mandate of the Co-operative Tribunal.

We however note that the Surcharge Order dated 26/2/20 was not  in place  at the time the two suits CTC 180 of 2019 and CTC 352 of 2019were filed.

This is what the Appellant seeks to challenge stating that this as an afterthought by the Respondents.

The Surcharge Order was issued on 26/2/20after  the inquiry report  was  issued  and adopted all issues raised before him the Commissioner  were  canvassed  by the parties.

Section  58  and 74  Co-operative  Societies  Act as aforesaid  provides  for the issuance  of inquiry  and Surcharge  Orders.

The procedure  for  filing  an Appeal  in the Co-operative  Tribunal is provided  for  under  Rule  8  Co-operative  Tribunal Rules  2009 sub rule  2.

In this  matter  the Appellant  has challenged  the  process  culminating  into the surcharge  order  dated  26. 2.2020. The Appellants  have submitted  that the  said  orders  should not  have been  issued  as it was  Res judicata.

In our understanding  the Appellant  challenges  the decision  and  powers  of the  commissioner to issue  a surcharge  order.

We find  that the  Surcharge  Order is not  Res judicata as per the  reasons  above.

3. CONCLUSION

We therefore find that the Appellant’s appeal has no merit and uphold the Surcharge Order dated 26/2/20 as properly issued.

Costs follow the cause and therefore order for costs of the  Appeal  of the Respondents to be paid by the Appellant.

Judgment signed, dated and delivered virtually this 27thday of May, 2021.

Hon. B. Kimemia   Chairperson   Signed  27. 5.2021

Hon. J. Mwatsama  Deputy Chairperson Signed  27. 5.2021

Mr. P. Gichuki    Member   Signed  27. 5.2021

Tribunal Clerk   Leweri

Getanda Advocate  for Appellant: Present

Abok  Advocate  for Respondent:  Present

Hon. B. Kimemia   Chairperson   Signed  27. 5.2021