Makau v Universal Traders Sacco Limited & another; Sacco Societies Regulation Authority (Intended Interested Party) [2024] KECPT 1499 (KLR)

Makau v Universal Traders Sacco Limited & another; Sacco Societies Regulation Authority (Intended Interested Party) (Tribunal Case 196/E258 of 2022) [2024] KECPT 1499 (KLR) (26 September 2024) (Ruling)

Neutral citation: [2024] KECPT 1499 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 196/E258 of 2022

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

September 26, 2024

Between

Robert Kinothya Makau

Claimant

and

Universal Traders Sacco Limited

1st Respondent

Mr DicksonM Tumbo & Pamela Joy Ouko t/a Sadique Enterprises

2nd Respondent

and

Sacco Societies Regulation Authority

Intended Interested Party

Ruling

1. The Notice of Motion Application dated 20th December, 2023 is brought under Article 159(2)(b) of the Constitution of Kenya, Section 1B, 1A & 3A of the Civil Procedure Act, Section 3,4,5(b), (f), 27, 33, 36, 40, 48 (1), (2)(b), 49(2) & 50 of the Sacco Societies Act 1, 3, 4, 20, 11, 13 and 16 of the Civil procedure Rules and all other enabling provisions of the Law seeking among others orders that:i.Spent.ii.Honorable Court be pleased to make an order joining the intended interested party to the proceedings as a necessary party.iii.Honourable Court be pleased to direct the interested party to conduct an audit and/or investigate the impugned account numbers B01-05XXXX maintained by the Respondent for the purposes of establishing the two and accurate state of affairs and file a report with court before 22/1/2024. iv.The Honourable Court be pleased to direct the 1st Respondent to Co-operate and furnish the Interested Party with all such records needed for purposes of conducting the exercise.

2. The Application was based on the grounds sworn by the Supporting Affidavit of Robert Kinothya Makau that:a.The 1st Respondent produced the impugned Statements of Accounts dated 26/4/2022 which statements do not meet the mandatory international financial reporting standards but even more grievous, the impugned statements of Accounts are altered and or doctored to fit the 1st Respondent’s story which action can only be termed as forgery;b.The 1st Respondent further produced demand letters, a loan form as well as an offer letter , all of which are totally inconsistent as to the money’s allegedly owing from the Claimant;c.The Claimant disputes all the above and shall endeavor to prove the inconsistencies during trials, however, given that the 1st Respondent is the custodian of the statements of accounts, it is in the interest of justice if the interested party as a neutral party be directed to investigate the impugned documents and report the true and accurate state of affairs over the same to court.d.The intended Interested Party is established under the Sacco Societies Act and is empowered to investigate any criminal activities or compliance by Sacco’s within the Act. Further, Section 40 of the Act obligates all Saccos to keep proper books of accounts showing true and fair state of affairs, as such, the intended Interested Party is a necessary party who will help court adjudicate over the dispute.

3. This Tribunal gave directions on 3rd January, 2023 and on 12th February, 2024, gave further directions for the Application to be canvassed by way of Written Submissions.The Claimant filed his Submissions dated 26th February, 2024 stating among others that they are challenging the statements of account on record and given that the Interested Party has a regulatory mandate to ensure that Saccos keep proper books of account which are a true and fair reflection of state of affairs, that should be joined to assist investigate and audit the impugned account number B01-05XXXX.

4. It was also the Claimant’s position in his Written Submissions that a party may be joined in a suit, not because there is a cause of action against them, but because that party’s presence is necessary in order to enable the court effectually and completely adjudicate upon and settle all the questions involved.

5. The Respondents filed their Written Submissions dated 16th February, 2024, stating among others that Interested Party must have a stake or interest in the proceedings, and that interest must be clearly identifiable and must be proximate enough to stand apart from anything that is merely peripheral.It was also the Respondent’s position that the prejudice to be suffered by the intended Interested Party in case of non-joinder must be demonstrated to the satisfaction of the court. To the Respondents, the Claimant has not established the interest or stake of the Interested Party nor the prejudice the Interested Party will suffer in the event of a non-joinder.

6. We have looked at the Application and the Submissions and the only question remaining for determination, is as to whether the threshold for joinder has been met and whether this Tribunal should order the interested party to conduct an audit and or investigate the impugned account number B01-05XXXX.

Has the threshold for joinder been met? 7. Joinder of parties is provided for in Order 1 Rule 10 (2) of the Civil Procedure Rules and it is now settled law that the factors to be considered for joinder include: The stake of the interested party and their relevance in the proceedings;

If the interested party will suffer any prejudice, if they are denied joinder.

8. In this particular case, the Claimant has not demonstrated the legal interest or stake the Interested Party has in this suit neither has he demonstrated satisfactorily the prejudice the interested party will suffer in the event of non-joinder, and as such, this Tribunal is not convinced that the proposed Interested Party is a necessary party in this proceeding.Should this Tribunal order the interested party to conduct an audit and/or investigate the impugned account numbers B01-05XXXX.It is important to state from the beginning that it is now settled law that where there exists other sufficient and adequate avenue or forum to resolve a dispute, a party ought to pursue that avenue or forum and not invoke the court process. This was the position of the court in the cases of Speaker of the National Assembly vs James Njenga Karume [1992]eKLR where the Court of Appeal held that:“In our view, there is considerable merit in the submission that where there is a clear procedure for the redress of any particular grievance prescribed by the Constitution or an Act of Parliament, that procedure should be strictly followed.”

9. We have looked at the Sacco Societies Regulatory Authority Act, especially the sections that deal with regulation and supervision of Saccos and the powers of the authority to inspect, advice or direct and it is our position that the Claimant did not follow the procedure laid down in the Sacco Societies Regulatory Authority Act before making an Application to this Tribunal to order Sacco Societies Regulatory Authority to do the same. From evidence and or Submission before Court, the Claimant and not even attempt to report the “forgery claims” or “accounts not complying with the International Financial Reporting Standards” to Sacco Societies Regulatory Authority before coming to this Tribunal and as such we decline to issue any orders and advise him to follow the channel prescribed by the law.

Final Orders.i.The Notice of Motion Application dated 20th December, 2023 fails.ii.Costs in the cause.iii.Mention to get a hearing date on 21/1/2025.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 26TH DAY OF SEPTEMBER, 2024. HON. B. KIMEMIA CHAIRPERSON SIGNED 26. 9.2024HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 26. 9.2024HON. BEATRICE SAWE MEMBER SIGNED 26. 9.2024HON. FRIDAH LOTUIYA MEMBER SIGNED 26. 9.2024HON. PHILIP GICHUKI MEMBER SIGNED 26. 9.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 26. 9.2024HON. PAUL AOL MEMBER SIGNED 26. 9.2024Tribunal Clerk JemimahOpiyo advocate for the Claimant/Applicant.Ms. Kinuthia advocate for the Respondent.Opiyo advocate- We request for a copy of the RulingTribunal Order: Court Administrator to apply for copy of RulingHON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 26. 9.2024