James Njiru Warui, Angelus Nderi Rubang’i & Samuel Muriithi Ngage and 239 others v Rwama Farmers Co-operative Society Limited [2020] KECPT 8 (KLR)

REPUBLIC KENYA

IN THE CO-OPERATIVE  TRIBUNAL

AT NAIROBI

C.T.C. NO.383 OF  2019

JAMES  NJIRU  WARUI...............................................................1ST CLAIMANT

ANGELUS  NDERI  RUBANG’I...................................................2ND CLAIMANT

SAMUEL  MURIITHI NGAGE AND  239 OTHERS ...................3RD CLAIMANT

VERSUS

RWAMA FARMERS  CO-OPERATIVE SOCIETY  LIMITED ......RESPONDENT

RULING

What is before  us for consideration  and determination  is the Claimant’s  Application  dated 12. 7.2019.  It Seeks,  in the main,  the  following orders:

a. That the Tribunal  be pleased  to grant  a temporary  injunction  against  the Respondent  restraining  it, it’s  agents and/or  servants  from utilizing  the award  given  in  HCC.NO.836/2003  in Rawana Farmers  Millers Limited; and

b. Costs

The Application  is supported  by the grounds  on its face  and the Affidavit  of  the  1st Claimant sworn  on 12. 7.2019.

The  Respondent  has opposed  the Application  by filing a Replying  Affidavits  sworn by  Julius  Waweru on 19. 8.2019.

Claimant’s Contention

Vide this  Application , the  Claimant  contend that  on or  about the year,  2003, the Respondent  sued  Thika coffee  Millers  for unpaid  coffee proceeds for the period: 1997/1998,1998/1999, and  1999/2000 . That  upon conclusion  of the suit,  the  Respondent  was awarded  the sum  of Kshs.15,097,783. 99.  That  Thika  Coffee  Millers preferred  an Appeal  which  was  subsequently dismissed. That  at the time of  dismissal, the decretal  sum had  accumulated  to Kshs.27. 5 Million. That  instead  of the Respondent  releasing  the said sums to the Claimants, it resolved  to disburse  the money  for it’s  own factory’s  use.  That it  is on  this basis  that they seek injunctive orders  to  prevent  utilization  of the said funds.

Respondent’s Contention

On its part,  the Respondent  has faulted  the Claimants  Application  on the ground  that it is incompetent, defective  and bad in law. That  the Claimants  have not  attached  any documentary  evidence  to prove  that they  are or  were members  of the Respondent  when the matter  was pending  in court for  17 years.  That the  only  intention  of the Claimants is  to  capitalize  on winning/gains  of the Respondent.

That the  Claimants  are blowing  hot and cold  at the same  time as the 1st Claimant  was the one who firstly proposed  for the utilization  of the funds  towards the Respondent’s  obligations.

That  the other members  who  opposed  HCC. No. 830/2003 are the ones  who want  to benefit  from its fruits.  That one  such person  is Stephen  Ngare  who even  made a witness  statement  in favour  of Thika  Coffee Millers.

That  the persons  in the frontline  championing  payment  of the proceed  of the award  to members  are the Respondent’s former  officials who  messed up  its operations, falsified  documents  in favour  of Thika Coffee Millers and even  testified  in its  favour.

That the same  persons  destroyed  society’s  records for the period in question  and that the  only records  available  are those of one factory. That  it will be  impossible  to implement  the  Claimant’s  demands as  it is not possible  to  ascertain  what is  due to which  member.

That due  to  inability  of the Respondents to obtain  records  of production  as  to  ascertain  how much  each member harvested  and supplied  for the particular  period, it was decided  that the money  be used for the development  of  the society and  improvement  of the production  and  quantity  of the coffee  and that  the same  was decided  by  majority  of the members in a general  meeting.

Supplementary  Affidavit

Vide  the Supplementary  Affidavit filed  on 1. 10. 2019,  the Claimants contend  as follows:

That  contrary  to the contention  that they  did not  document  evidence  to prove membership,  the attached  authority  to act  contain  names of  members  and  their  membership numbers.

That infact, the Respondent  at paragraph  8  of the Replying  Affidavit  acknowledges  the 1st  Claimant  as  its member. That  it is not  true that  the  1st  Claimant  proposed  the utilization  of the said  funds  by advocating  for  payment  of the society’s  obligation  but  rather  that he proposed  that the Advocate’s fees of Kshs.8. 2 Million  be paid  first and  that members does  agree  on how to utilize the balance. That  no Special  General  Meeting  has ever  been held  since  30. 1.2019 to decide  on how to  utilize  the balance  of the  award. That  the award  was with  respect  to proceeds  of  members  and  that members  should be paid.

Written Submissions

Vide  the directions  given on  23. 8.2019, the Application  was disposed of by way  of  written  submissions.  The Claimant  filed theirs  on 1. 10. 2019 while  the Respondent’s  did so  on  15. 1.2020.

We  will  consider  the said submissions  when determining  the issues  in controversy  below.

Issues  for determination

We have  framed the following  issues  for determination:-

a. Whether  the Claimants  have established  a proper  basis  to  warrant  the grant  of  an injunction; and

b. Who  should  meet the  cost  of the Application.

Temporary injunction

We have  jurisdiction  to make  an order  regarding  temporary  injunctions  by dint  of order 40  of the Civil  Procedure  Rules. Order  40  Rule 1  (a) provides  thus:

“ Where  in any suit  it is proved  by Affidavit or otherwise –

a. That  any property  in dispute  in a suit is  in  danger  of being  wasted,  damaged, or alienated  by any party to  the  suit, or wrongly sold in execution of a decree,  the court may  by order  grant  a temporary  injunction to  restrain  such  act, or  make such  other  order  for the purpose  of staying  and preventing  the wasting, damaging, alienation, sale,  removal, or disposition of the property  as the court thinks fit, until  the disposal  of the  suit  or until further  orders.

Before  exercising  the above  jurisdiction,  we are  guided  by  the Principles  enunciated  by the court in  the case of  Giella – versus-  Cassman  Brown [1973] EA. They  include:

a. A prima facie case  with a probability  of success;

b. Irreparable  damage; and

c. Balance  of Convenience.

The court   in the  case of Mrao  Limited  versus  first  American Bank  of Kenya  Limited (2003) eKLR explained what  Constitute  a Prima Facie  case  in the following terms:

“.......A Prima Facie  case is  more than  an arguable  case. It is  not sufficient  to  raise  issues.  The evidence  must show  an infringement  of a right  and the probability  of  the Applicant’s case  upon trial.  It is a case 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 as to call  for an explanation from  the latter......”

The  question  that arises  is whether  the Claimant’s  vide the Instant  Application have established  a prima face case  with a probability  of  success.  It is their case that the Respondent successfully prosecuted  HCC. No. 836/2003 which resulted  in  it being  awarded  Kshs.15,097,783. 99/=. That  the said  award  was Appealed  against  and  the  said  Appeal  was subsequently  dismissed. That  at the time of  dismissal of the Appeal, the  decretal amount  had accumulated  to  Kshs.27. 5 Million. That instead  of releasing  the said amounts  to the members,  the Respondent  disbursed  it to its factory’s use. That the said  monies  related  to members  produce  and that the Respondent  ought  to have  released  the same to members.

On its part,  the Respondent  has  opposed  the grant  of the said injunction  on the ground  that the said  monies  have been  utilized  in line  with a resolution  passed  in a meeting  convened  as per  the societies  by-laws. That  infact,  it was  the  1st  Claimant  who proposed  how  the said  funds  would be  applied. That the  decision  to plough  the money back to the society was as a  result  of lack  of records of members  production  for  the period  in question. That  the lack  of the said  records  made it  impossible  to know  how much  each member  harvested  and supplied  for  the said period.

We have perused  annexture  JW-1  of  the  annextures  to the  Replying Affidavit of the Respondent  sworn by Julius  Waweru. It is  the minutes  of the meeting  of the  Respondent  held on  30. 1.2019- Minute 4/30/01/2019 is the  only minute where  the matter  of the proceeds  of  the suit  is discussed. Vide  the said minute, the  only  issue discussed  and a resolution  passed is  the payment  of the Lawyer’s  fees.  In reaction to the  report  presented  by the Chairman  of the 1st Respondent,  one of the  members,  Mr. Daniel  Warui  asked about  when the  Kshs.19. 7 Million  already  paid  would be  paid to members.  In  response,  the Chairman  “informed  him that all the funds  of the society  belongs  to members  and  when all  the money  is paid  he will convene  a meeting  to decide  on the same.”

Apart  from the issue  of  the legal  fees,  the minutes  does not  document  any other  resolution  passed  by the members.  It is thus  our  finding  that  based  on the material  placed before  us, we do not find  any resolution  by members  of the 1st  Respondent  consenting  to the utilization  of  the proceeds  of the suit  by them.

We say  so taking  note  the fact  that it is  not in dispute  that the said  proceeds  related to members  produce  supplied to  the Respondent  by its  members  from the year  1997 until  2000.

We have  noted   the contention  by the Respondent  that the records  of produce  for the said  period  cannot  be traced  and  blames  their disappearance  on the Claimants. Though  this is a  matter  for trial, the question  that we  pause  preliminarily, is that, on what  basis  was the claim  in  HCC.No.386/2000 proved  if not  on the records  of supply  of the said produce?

Whilst  we agree  with the Respondent  that the funds  of the Respondent  belongs  to all the members, the question  arises  as regards  the specific  purpose  for which  the proceeds  of  the judgment  on  HCC. No. 386/2000 was  meant to  achieve.  In simple  terms,  the 1st Respondent  was pursuing  payments  for produce  delivered  and/or supplied  to each member.  It therefore follows  that the members  of the Respondent  ought  to be  the  primary  beneficiaries of the  said Judgment. This is so unless the said members waive  the said  right by  resolving  to apply  the money  in a General  Meeting. As  we have held  above,  no such  meeting  was convened  and that no  resolution  was passed  to sanction the Respondent  to utilize   the said proceed.

The upshot  of the foregoing  is that  we find  that the Claimants  have established  a Prima Facie  case  to warrant us issue  a temporary  injunction  preserving  the proceeds of the Judgment  in HCC. No. 836/2003.

In light of  our holding  above,  we find that  we will not  consider  the other two  limbs  of the Principles  in Giella versus Cassman  Brown.

Conclusion

The upshot  of the foregoing  is that we find  merit  in the Claimant’s  Application  dated 12. 7.2019 and hereby  order  as follows:

a. That  a Temporary  Injunction  is hereby  issued  restraining  the Respondent  whether  by itself,  its agents, and/or  servants  from further  utilizing  the  proceeds  of Judgment  given  in H.CC.No.836/2003,Rwama Farmers’ Co-operative Society versus  Thika Coffee Millers Limited pending the hearing and  determination  of the main claim; and

b. Costs  in the cause.

Read and delivered in  accordance  with the guidelines  issued  by  the Hon. Chief Justice  on 15. 3.2020, this 21stday of May, 2020.

Prepared by Hon. B. Kimemia Chairman, Hon. F. Terer Deputy Chairman, P. Gichuki Member.

With consent of the parties, the final orders to be delivered by email, as accordance to the prevailing measures during the covid-19.

Hon. B. Kimemia     Chairman              Signed      21. 5.2020

Hon. F. Terer            Deputy Chairman    Signed      21. 5.2020

P. Gichuki               Member                       Signed      21. 5.2020