Mathenge v Marmanet Coop.Society Limited [2023] KECPT 405 (KLR)

Mathenge v Marmanet Coop.Society Limited (Tribunal Case 524/E308 of 2021) [2023] KECPT 405 (KLR) (15 June 2023) (Ruling)

Neutral citation: [2023] KECPT 405 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 524/E308 of 2021

BM Kimemia, Chair, J. Mwatsama, Vice Chair, Beatrice Sawe, Fridah Lotuiya, P. Gichuki, Michael Chesikaw & Paul Otieno Aol, Members

June 15, 2023

Between

Simeon Miano Mathenge

Claimant

and

Marmanet Coop.Society Limited

Respondent

Ruling

1. The Application for Preliminary Objection dated February 9, 2022 was filed by the Respondent to challenge a Notice of Motion Application dated November 2, 2021 by the Claimant.The Preliminary Objection for striking out the Claimants prayers were grounded on the following:i.That the suit is time barred under the limitation of actions Act Cap 22. ii.That the Tribunal lacks jurisdiction to hear and determine the matter.iii.That the claim does not fall within section 76 of the CooperativeSocieties Act.

2. As we consider the Preliminary Objection, it is prudent to understand the background of this dispute.First, the Claimant is a member of the Respondent and a director of Marmanet Service Station which was owned by the Respondent.

3. That a civil suit Nyahururu PM.CC.NO. 63 of 2000 was filed by Marmanet Service Station against Marmanet Farmers’ Cooperative Society Limited of which the Defendants were ordered to pay a decretal sum. The court order was not complied with and the Plaintiff sought to attach the moveable properties of the Defendant.

4. As is expected, the board of directors of the respondents requested the creditors to advice their auctioneer to put on hold the sale as they excise, sub-divide and sale part of their plot number 3 to liquidate the debt.

5. Nine (9) plots were later sub-divided from plot number 3 and the respondent Board of Directors agreed to sell plot number 9 measuring 50ft by 100ft to the claimant.

6. That on July 19, 2000, the Executive Directors of the Respondent signed a Sale Agreement with the Claimant for the plot marked number 9 for a consideration of Kshs 80,000/= thereafter the Claimant paid the total amount on July 25, 2000 and he was issued with a receipt.

7. On August 23, 2001, on Inquiry from the Claimant, the Respondent responded in writing that the transfer of the plot was ongoing and gave assurance that it would be ready before the end of that year 2001. That transfer did not take place.

8. Vide a letter dated August 25, 2015, the Claimant through his Advocate wrote to the Chairman of the Respondent Cooperative Society advising them to transfer plot number 9 to the Claimant, the response from the Respondent denied the existence of the sale of plot number 9 which was excised from plot number 3 at the same time the Respondents denied that the society do not have records to support the claim.

9. Resulting from the information which they hold, the Respondents filed the Preliminary Objection of which the tribunal issued orders for directions on February 14, 2022.

10. We have now read and considered the submissions from both the Respondent and the Claimant regarding the Preliminary Objection and analyse as follows:

11. In the case of Mukisa Biscuits Manufacturing Limited versus West-end Distributors (1969)E.A696, the lordship observed what constitute a Preliminary Objection as:“A Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a Preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court or a Plea of limitation or a submission that the parties are bound by a contract giving rise to the suit to refer the dispute to arbitration”.

12. Having established what a Preliminary Objection entail, we turn to whether the Preliminary Objection raised by the Respondent is suitable. We start with:i.Whether the Tribunal has jurisdiction to hear and determine the matter at hand.Here we take cognizance of parties reference to the decided case in owners of Motor Vessel Lilian “s” versus Caltex Kenya Limited 1989 for the interpretation of the court regarding the meaning of jurisdiction:“I think that it is reasonably plain that a question of jurisdiction ought to be raised at the earliest opportunity and the court seized of the matter is then obliged to decide the issue right away on the material before it. 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 the opinion that it is without jurisdiction.”

13. As a stamp of approval, the Supreme Court of Kenya in Civil Application number 2 of 2011 between Samuel Macharia versus KCB Limited & 2 others in dictum stated that:“a court’s jurisdiction flows from either the constitution or statute or both. Thus a court of law can only exercise jurisdiction conferred by the constitution or any written law. It cannot arrogate to itself jurisdiction exceeding that which was conferred upon it by law.”

14. Flowing from the above, the Cooperative Tribunal is established under the Cooperative Act Cap 490 and Section 76 of the same Act cloth the Tribunal with jurisdiction to hear and determine disputes that arise within the Cooperative sector:“(1)If any dispute concerning the business of a co-operative society arises— (a) among members, past members and persons claiming through members, past members and deceased members; or (b) between members, past members or deceased members, and the society, its Committee or any officer of the society; or (c) between the society and any other co-operative society, it shall be referred to the Tribunal. (2) A dispute for the purpose of this section shall include— (a) a claim by a Co-operative Society for any debt or demand due to it from a member or past member, or from the nominee or personal representative of a deceased member, whether such debt or demand is admitted or not; or (b) a claim by a member, past member or the nominee or personal representative of a deceased member for any debt or demand due from a co-operative society, whether such debt or demand is admitted or not; (c) a claim by a Sacco society against a refusal to grant or a revocation of licence or any other due, from the Authority.”

15. The Claimant is a member of Marmanet Cooperative Society and falls properly within the ambit of Section 76 (1)(a) and (b).

16. To demonstrate that Cooperative Tribunal is vested with jurisdiction to hear and determine Cooperative disputes, reference is made to the case of Muthui wa Kariuki versus Tembo Cooperative Sacco (2014)eKLR in which the high court stated thus:“As a result, I uphold the Defendants Preliminary objection and find that this matter is improperly before this court. As such it is an abuse of this courts process and should have been filed in the Cooperative Tribunal accordingly, I find that this court lacks jurisdiction to entertain this matter as filed and the same is struck out with costs to the Defendants.”

17. It is our considered view that resulting from the law and the decided cases, this Tribunal has jurisdiction to hear and determine this matter.

18. On whether the claim falls within Section 76 of the Cooperative Societies Act, the Claimant bought a piece of plot which was offered to him by the Board of Directors of the Respondent within the meaning of the ‘business of the society’ as provided under Section 76 (1) of the Cooperative Societies Act Cap 490 on interpretation of the context of business of a society, the court in a case of Gatanga Coffee Growers Cooperative Society Limited versus Gitau (1970) stated that:“The business of a society is not confined to internal management of the society, but it covers every activity of the society within the ambit of its By-Laws and the Rules.”

19. We consider that selling off a plot to pay off a debt and salvage the movable properties of the society which was attached and on the verge of being auctioned was the business of the society. The fact that an Annual General Meeting was held which resolved under min. 3/2000 to exercise the plots and sell them was a show of approval within the meaning of the By-laws and Rules of Marmanet Cooperative Society Limited.

20. The claim therefore falls within Section 76 (1) of the Cooperative Society Act.

21. On the Preliminary Objection because the claim is time barred under the Limitation of Actions Act. We have considered the statements and the annextures by the Claimant prior to 2015 and the possible reasons as to whether this objection can stand.

22. It is our view that subject to full hearing the Board of Directors who served in the year 2000 sold the plot marked number 9 to the Claimant in good faith. However, why they could not transfer the same in the name of the Claimant despite writing letters to him of hope is another story.

23. Overtime the Board of Directors of the Respondent changed and circumstances also changed. It is until the receipt of the letter dated September 2, 2015 from the Respondent that the Claimant discovered that things are longer the same with the Respondent.

24. Flowing from the above, we take cognizance of the provisions of Section 26(c ) of the Limitations of Actions Act Cap 22 which provide as follows:“The action is for relief from consequences of a mistake, the period of limitation does not begin to run until the plaintiff has discovered the fraud or mistake or could not reasonable diligence have discovered.”

25. The upshot of this provision is that time start to run from the time the Claimant discovered that he was short changed or that a mistake occurred which a reasonable diligence could not have discovered.

26. In conclusion having considered the law and the decided cases, we order as follows:a.That the Preliminary Objections dated February 9, 2022 (a)(b) and (c)raised by Respondent is hereby dismissed with costs to the Claimant.b.That the orders issued by this Tribunal on February 14, 2021 on the Claimant’s notice of motion is extended until this matter is heard and determined on merit.c.Pre- trial directions on September 7, 2023. Notice to issue.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 15TH DAY OF JUNE 2023. HON. BEATRICE KIMEMIACHAIRPERSONSIGNED 15. 6.2023HON. J. MWATSAMADEPUTY CHAIRPERSONSIGNED 15. 6.2023HON. BEATRICE SAWEMEMBERSIGNED 15. 6.2023HON. FRIDAH LOTUIYAMEMBERSIGNED 15. 6.2023HON. PHILIP GICHUKIMEMBERSIGNED 15. 6.2023HON. MICHAEL CHESIKAWMEMBERSIGNED 15. 6.2023HON. PAUL AOLMEMBERSIGNED 15. 6.2023Tribunal Clerk Jemimah/JonahMs. Kemunto holding brief for Mr. Chimei for the ClaimantMarmanet Cooperative – no appearance.