Metropolitan National Sacco Society Limited v Rotich [2023] KEHC 26324 (KLR)

Metropolitan National Sacco Society Limited v Rotich (Civil Appeal 229 of 2021) [2023] KEHC 26324 (KLR) (Civ) (8 December 2023) (Judgment)

Neutral citation: [2023] KEHC 26324 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 229 of 2021

DAS Majanja, J

December 8, 2023

Between

Metropolitan National Sacco Society Limited

Appellant

and

Weldon Rotich

Respondent

(Being an appeal from the Judgment and Decree of Co-operative Tribunal at Nairobi dated 4th March 2021 in Tribunal Case No. 694 of 2019)

Judgment

Introduction and Background 1. On 04. 11. 2019, the Respondent filed suit against the Appellant (“the Sacco”) at the Co-operative Tribunal (“the Tribunal”) claiming that he had written a letter on 05. 07. 2019 expressing his wish to withdraw membership from the Sacco and thus sought a refund of his shares.The Respondent averred that despite seeking refund for his shares, the Sacco failed to refund him Kshs. 77,000. 00 being deposits contributed.

2. The Sacco, in its defence, did not dispute that the Respondent was its member. It stated that his savings amounted to Kshs. 67,000. 00 and not Kshs. 77,000. 00. It added the Respondent failed to make a request in writing for the refund and that in accordance with the By-laws of the Sacco, a member is required to wait for 60 calendar days after making that request before his funds are released. The Sacco further stated that it is guided by its By-laws and rules of operation from the Sacco Societies Regulatory Authority (SASRA) and resolutions of the Sacco Annual General Meeting (AGM). That since the Respondent had demanded his shares back via the suit, the Sacco had, through its 2019 AGM made a resolution that all refunds will be made on a first come first served basis and through that resolution, the Respondent’s savings were due for a refund in January, 2022. For these reasons, the Sacco urged the Tribunal to dismiss the suit as the Respondent was not entitled to receive the refund under the Sacco By-laws or any other law for that matter until he complied with them.

3. The suit was canvassed by way of written submissions which were put forth by the parties. In its judgment rendered on 04. 03. 2021, the Tribunal framed two issues for its determination; whether the Respondent served the Notice of Withdrawal upon the Sacco and whether the resolutions passed by the Sacco oust the jurisdiction of the Tribunal to make any orders regarding refunds.

4. On the first issue, the Tribunal found that even though the said Notice was handwritten and did not contain an endorsement that it was duly received, it concluded that the Notice was served upon the Sacco. On the second issue, the Tribunal held that its jurisdiction under section 76 of the Co-operatives Societies Act (Chapter 490 of the Laws of Kenya) was neither subject to nor subservient to the resolutions passed by the respective Co-operative societies. Thus, the Sacco’s reference to the 2019 AGM resolution endorsed by SASRA and the Commissioner for Co-operative Development was inconsequential. That the resolutions are of no legal effect as far as the Tribunal’s jurisdiction to entertain claims of this matter are concerned.

5. On the Respondent’s claim for the Kshs. 77,000. 00 refund, the Tribunal agreed with the Sacco that from the Statement of Account, the amount due was Kshs. 67,000. 00. The Tribunal held that the Respondent had established his case on a balance of probability and entered judgment in his favour for Kshs. 67,000. 00 with costs and interest.

6. It is this judgment that the Sacco now appeals through its Memorandum of Appeal dated 01. 07. 2023. Since the submissions regurgitate the parties’ positions and background I have already summarised above, I do not find it necessary to highlight the same but I will only make relevant references in my analysis and determination below.

Analysis and Determination 7. This court derives its appellate jurisdiction from section 81 of the Co-operative Societies Act. Since there is no limitation on the court’s appellate jurisdiction, this court exercises its ordinary jurisdiction under the Civil Procedure Act (Chapter 21 of the Laws of Kenya). As this is a first appeal, the primary role of the first appellate court is to re-evaluate, re-assess and re-analyse the evidence record and then determine whether the conclusions reached by the Tribunal are to stand or are to be disturbed and give reasons explaining why it has arrived at a particular conclusion (see Kenya Ports Authority v Kuston (Kenya) Limited (2009) 2EA 212 and Peter Mwangi Chege & 13 others v Joseph Wanyoike & 7 others ML HCCA No.8 of 2011 [2018] eKLR)

8. The appeal by the Appellant raises various points of law and fact. First, that the Tribunal erred by disposing the claim solely through written submissions without hearing any viva voce testimonies and/or evidence hence totally disregarding the evidence of the Sacco and its witnesses thus making orders that were detrimental to the Sacco and which orders can lead to the collapse of the Sacco as a Cooperative Society.

9. Second, that the Tribunal erred when it determined that the Sacco’s 2019 AGM resolutions endorsed by SASRA and the Commissioner for Co-operative Development were inconsequential. That it failed to appreciate that the AGM resolution not only bind the Tribunal but also the parties herein and that it failed to appreciate that the restructures and rescheduled refund process was to prevent the collapse of the Sacco by avoiding a run on the deposits and hence the reason why SASRA and the Commissioner of Cooperatives had approved the said refund process.

10. Third, that the Tribunal ignored the provisions of section 27 of the Co-operatives Societies Act regarding the resolutions the AGM can make and which resolutions bind the Society and its members/former members but chose to rely only on section 76 thereof, which section was never in dispute as to its import. Lastly, that the Tribunal in fact erred in holding that the Sacco had received the Withdrawal Notice from the Respondent without giving any reasons to that effect and without any basis for such a determination.

11. On the ground that the Tribunal erred in disposing off the matter by way of written submissions rather than viva voce evidence, the record indicates that the Tribunal cited the Covid-19 pandemic as the reason for not conducting a viva voce hearing. It thus directed the parties to file written submissions and that the Sacco file the Respondent’s statement of accounts.

12. Section 78(1) and (5) of the Co-operatives Societies Act provides that, “The Tribunal shall not be bound by the rules of evidence” and that, “Except as expressly provided in this Act or any rules made thereunder, the Tribunal shall regulate its own procedure”. Rule 3 of the Co-operative Tribunal (Practice and Procedure) Rules, 2009 goes on to state that, “Nothing contained in these Rules shall limit or otherwise affect the inherent power of the Tribunal to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal.” The aforementioned provisions grant the Tribunal discretion to determine the manner in which it receives evidence and conducts its procedures. The Tribunal therefore had discretion to determine whether to proceed with the matter by way of viva voce evidence or in such a manner that it deemed fit in the circumstances. In Kibos Distillers Limited & 4 others v Benson Ambuti Adega & 3 others KSM CA Civil Appeal No. 153 of 2019 [2020] eKLR, Makhandia JA., adopted the principle that where there is no real, substantial and material dispute of fact which makes it impossible to dispose of a matter without resort to viva voce evidence, the factual differences can be decided on the papers by affidavit evidence. In dismissing the appellants’ challenge that viva voce evidence was necessary in that case, the learned Judge held that the said appellants had not indicated the nature and type of witnesses and evidence that they would have called for the trial court to consider if viva voce evidence was necessary. That they did not demonstrate what prejudice they have suffered as a result of the trial court not taking viva voce evidence. Further, that no application was made to adduce oral evidence and no objection was raised against the directions given by the trial judge.

13. In this case, the facts giving rise to the suit were largely undisputed. It was common ground that the Respondent was a member of the Sacco and that he sought a refund of his share deposits because he claimed to have withdrawn his membership from the Sacco. The Sacco did not dispute that the Respondent was entitled to the refund and all they disputed was the sum to be refunded and when the same was to be refunded. It averred that based on the Sacco’s 2019 AGM resolutions, he had to wait until January 2022 for the refund. These were not issues that required viva voce evidence to resolve and that documentary evidence supplemented with written submissions would enable the Tribunal come to a conclusion. Further, the Sacco has not demonstrated what the nature and type of witnesses and evidence that they would have called for the Tribunal and this court to consider if viva voce evidence was necessary. The Appellant did not raise any objection to the Tribunal’s directions on the manner of disposal of the suit or make an application to adduce oral evidence in as much as the Sacco was represented by counsel. Finally, the question of whether or not the Sacco was served with the Notice of Withdrawal by the Respondent could be inferred and determined from the pleadings and documentary evidence of the parties. Overall, I find that the Appellant has not demonstrated that it suffered any prejudice to the extent that there was a miscarriage of justice on account of the procedure adopted by the Tribunal. This ground of appeal therefore fails.

14. The Appellant assails the Tribunal for concluding that the Sacco’s AGM resolutions were inconsequential to the Tribunal’s jurisdiction. The Tribunal’s jurisdiction cannot be ousted by the resolution of the Sacco as it is founded on statute. Under section 67(5) of the Sacco Societies Act, all disputes arising out of Sacco business under the Act shall be referred to the Tribunal. Section 76(2)(a) of the Co-operative Societies Act provides in part that, “a claim by a member, past member…… for any debt or demand due from a co-operative society, whether such debt or demand is admitted or not” is a dispute that shall be referred to a Tribunal.

15. The Respondent was within his right to move the Tribunal to determine his claim from the Sacco and the Sacco’s reliance on its By-laws and resolutions is a matter of evidence to be considered and weighed by the Tribunal in determining the rights of the parties in the dispute. In short, it is in the exercise of its jurisdiction to resolve the dispute between the Sacco and its member, that the Tribunal is bound to consider the effect of the resolutions of the Sacco’s AGM in resolving the dispute.

16. As to whether the Respondent served the Notice of Withdrawal, the record indicates that the said Notice was not endorsed as having been received by the Sacco and there is no evidence that it was served upon the Sacco. However, the Tribunal held that it believed that the notice was received by the Sacco. In Nyangilo Ochieng & Another v Kenya Commercial Bank KSM CA Civil Appeal No. 148 of 1995 (1996) eKLR, the Court of Appeal held that once a party alleges non-receipt of a notice, the burden is on the other party to prove that the notice was in fact served. I therefore agree with the Sacco that it was incumbent upon Respondent to prove that he had served the Sacco with the notice of withdrawal, once the Sacco denied receiving it.

17. The Sacco stated that it knew of the notice when the Respondent filed the suit. The Sacco also stated that under its By-laws, a member would be entitled to a refund of his shares within 60 days of the notice of withdrawal being received by the Sacco. Therefore, assuming the Sacco knew of the notice when it was served with the claim, that is on or about 08. 11. 2019, then the Respondent ought to have been paid at least by 09. 01. 2020. The Sacco stated that this was however not possible following its resolution that refunds would be processed on a first come first serve basis and that the Respondent’s refund would be forthcoming in January 2022.

18. It now December 2023, meaning that the Sacco ought to have paid the Respondent by now. I agree with the Respondent that much, if not all the issues in this appeal are moot and that there is no longer an actual controversy between the parties and that any decision by the court would not have any actual or practical impact as the refund is now due to the Respondent.

19. I find and hold that the Tribunal did not err in finding that the Respondent was entitled to the refund because as admitted by the Sacco, the Respondent was entitled to it, just not within 60 days of the notice of withdrawal but as resolved in the AGM.

Disposition 20. For the reasons outlined above, the appeal lacks merit. It is dismissed with costs to the Respondent. The costs are assessed at Kshs. 25,000. 00.

DATED AND DELIVERED AT NAIROBI THIS 8TH DAY OF DECEMEBR 2023. D.S. MAJANJAJUDGEMr Korir instructed by H. T. & Associates Advocates for the Appellant.Mr Wahome Murakaru, Advocate instructed by the Respondent.HCCA NO. E229 OF 2021 JUDGMENT Page 3