Mwiki Psv Sacco Limited v Others [2022] KECPT 152 (KLR)

Mwiki Psv Sacco Limited v Others (Tribunal Case 271 of 2021) [2022] KECPT 152 (KLR) (Civ) (18 February 2022) (Ruling)

Neutral citation: [2022] KECPT 152 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Civil

Tribunal Case 271 of 2021

J. Mwatsama, Vice Chair, P. Gichuki & B. Akusala, Members

February 18, 2022

Between

Mwiki Psv Sacco Limited

Claimant

and

Simon Karangu Mbirua & 24 Others

Respondent

Ruling

1. This suit has 4 applications for determination.The 1st application is dated 28. 5.2021 by the claimant. the same is brought under section 58,73 and 75 (1) co-operative societies act, section 1A,1B,3A Civil Procedure Act and enabling provisions of the law.The orders sought were :1. That this honourable tribunal be pleased to enter summary judgment against the respondents as per section 75 (1) of the Cooperative Society Actpursuant to the surcharge order dated May 28, 2020. 2.That costs of this application be borne by the respondents.The same was premised on grounds on the face of the application to wit it stated the respondent were officials and members of the claimant.That in September 2019 Commissioner of Co-operative Development conducted investigations on operations of the Claimant. In a conclusive report the Commissioner of Cooperative Development found the Respondent had misappropriated and or mismanaged the Claimants funds to a tune of Kshs. 23,801,536. 00/= pursuant to the Claimant members resolution at a Special General Meeting the finding of the report were adopted and surcharged proceedings were to be instituted against the Respondent to recover the sum of Kshs. 23,801,536. 00/=.

2. Accordingly the Commissioner of Cooperative Development issued a Notice of intention to Surcharge dated 3. 3.2020 against the Respondent and the Respondent filed various responses and or submissions. Commissioner of Cooperative Development after the responses and submissions proceeded to issue a surcharge order dated 28. 5.2020 in the following sums:NO. NAME AMOUNT (KES)

1. Simon Karangu Mbirua 2,661,844. 00

2. Margaret Wangari Mwangi 2,341,246. 00

3. Ruth Nduta Njogu 508,687. 00

4. Catherine Gitau 451,866. 00

5. Peter Maina Wambugu 612,458. 00

6. John Karugo Gaitungu 534,750. 00

7. Joan Wanjiku Mbirua 705,773. 00

8. Joseph Mwangi Maina 1,601,893. 00

9. Joseph Njoroge Mbucho 595,000. 00

10. Margaret Wairimu Mbirua 1,120,625. 00

11. Peter Ng’ang’a Ngahu 3,205,348. 00

12. Wilson Gitau Gakubu 2,034,233. 00

13. Jacinta Wambui Mwangi 209,200. 00

14. Simon Wachira Mutua 857,478. 00

15. George Wambugu Maina 301,100. 00

16. Robert Mwangi Kimani 535,889. 00

17. James Maina 77,000. 00

18. Hellen Karugo 805,493. 00

19. Milkah Wairimu Njoroge 808,747. 00

20. Live Well Co. Ltd 20,000. 00

21. Jacinta Warutere 652,004. 00

22. Joseph Mutai Gitau 1,838,551. 00

23. Prime Four Co. Ltd 56,667. 00

24. Peter Ngoigo 231,056. 00

25. Teresia Wanja Mwangi 1,034,628. 00

26 TOTAL 23,801,526. 00 The claimant/applicants claim that there is no appeal on the surcharged orders and despite reminders the amounts remain unpaid.

3. The application is supported by the affidavit of joshua maina githinji the claimant chairman sworn on 28. 5.2021. The application was opposed by the 8th , 11th 13th 16th 19th and 15th respondent who swore a replying affidavit on 16. 9.2021 and stated the same was in response to the application dated 16. 8.2021 to which none of the applications filed herein has the date. We therefore believe it was a reply to the application at hand.The said response stated the respondent were unaware of the investigations done by the Commissioner of Cooperative Development. That there was no proof of the claimant’s members being satisfied and starting the surcharge process against them.That he did not file any reply and or submissions with Commissioner of Cooperative Development as adduced in paragraph 7 of the supplementary affidavit of Joshua Maina Githinji.That there is an ongoing Co-operative Tribunal Appeal No. 1 of 2020 dated 26. 7.2020 filed on 29. 1.2020 and pleadings served on respondent on 1. 7.2020. The respondent aver the present application is premature as the appeal has not been heard by tribunal and thus the application ought to be staged pending hearing of the appeal.

4. That the Management Committee has been signing and adopting the letter of Management Committee responsibilities on preparation and outcome of audited accounts and there has been no indication of any embezzlement, negligence, irregular and or unlawful transactions.Any losses occurred due to mismanagement of Claimant should not be attributed to them because Claimant had mandate of running the affairs.The inquiry was tainted because Commissioner did not acknowledge role of County Cooperative Commissioner and Sub County Cooperative Officer who were the overseers /Supervisors of the Cooperative Society.No other Respondent filed a response to the said Application.Parties were directed to file written submissions and only the Applicants filed their submissions dated 21. 10. 2021 filed on 29. 10. 2021. The 8th, 11th, 13th, 16th, 19th, and 25th Respondent filed their submissions dated 21. 10. 2021 on 29. 10. 2021.

5. The issues for determination from the face of the Application are :Issue oneWhether the Claimant has established a case for Summary Judgment against the Respondents?Issue twoCosts.

Issue one Whether the Claimant has established a case for Summary Judgment against the Respondents? 5The claimant/applicant case for summary judgment is set out in the statement of claim. The respondent were surcharged the amounts as outlined earlier in the ruling and the respondent having not paid up after the time lapse the applicant wishes for summary judgment to be entered.The 8th, 11th, 13th, 16th, 19th, and 25th respondent opposed the application for summary judgment by stating they had a substantive appeal filed out at the tribunal which is yet to be determined.The Tribunal Appeal No. 1 of 2020 filed on 29. 6.2020. Joseph Mwangi Maina & 7 others vs Commissioner for Cooperative Development.The aforementioned respondents therefore state this application by the applicants is premature before the appeal is determined.

6. Order 36(1) Civil Procedure Rule 2010 states“(1) In all suits where a plaintiff seeks judgment for:a.A liquidated demand with or without interest; orb.The recovery of land, with or without a claim for rent or mesne profits, by a landlord from a tenant whose term has expired or been determined by notice to quit or been forfeited for non-payment of rent or for breach of covenant, or against persons claiming under such tenant or against a trespasser,Where the defendant has appeared but not filed a defence the plaintiff may apply for judgment for the amount claimed, or part thereof, and interest, or for recovery of the land and rent or mesne profits.”The courts have emphasized that it must be satisfied there is no need to go to trial from the facts set before it before Summary Judgment is granted.However, the Respondent above having filed the Appeal did not inform the Claimant/ Applicants of the same and the appeal is now known. To the Claimant/Applicants after the Application for Summary Judgment has been filed.Be that as it may the Tribunal shall not turn a blind eye to the appeal pending before it which was filed almost one year before the current suit was filed.There is a Cooperative Tribunal Appeal No. 1 of 2020 which needs to be disposed off before the case at hand or any other Application is determined. We thus find the Application is premature for the 8th, 11th, 13th, 16th, 19th, and 25th Respondent and thus the same is not allowed for the aforementioned Respondents.

The other Respondents did not respond to the Application despite directions being given on 19. 8.2021 and 19. 10. 2021.

7. Summary Judgment against the 1st, 2nd 3rd, 4th, 5th, 6th , 7th, 9th, 10th, 11th, 12th, 14th, 15th, 17th, 18th, 20th, 21st, 22nd, 23rd, and 24th, Respondents can only be entered wheni.Sum claimed is liquidated claim.ii.Respondent entered appearance but not filed a defence.iii.Where there is a defence the court to satisfy there are no triable issues.Thus to determine the Application against the aforementioned Respondent’s the above must be satisfied.We note despite the Respondent not filing a response to the Application the present case was filed together with Application not affording the Respondent an opportunity to file a defence if at all which then the Application for Summary Judgment ought to have followed.It is our considered view that the requirement above have not all been met and thus the Application will fail for being premature.Order 36 Rule 1 Civil Procedure Rule 2010 is clear that for an Application for Summary Judgment the Respondent ought to have entered appearance and no defence filed.It is clear the Application dated 28. 5.2021 was filed while filing the Statement of Claim. There was no time accorded for the Respondent to respond or file a Statement of Defence with the Application for Summary Judgment already in tow.

8. The upshot of the above is that the Application dated 28. 5.2021 is dismissed against all the Respondents herein.8th, 11th, 13th, 16th, 19th, and 25th Respondent to put up their Appeal No. 1 of 2020 for hearing 90 days from the date of this Ruling.Mention for Pre-trial directions for CTC. No. 271 of 2021 on11. 5.2021. Parties to file their pleadings, witness statements and documents 30 days from today.

9. The second Application dated 11. 8.2021 by the 1st, 4th, 5th, 7th, 10th, 12th, 15th, 17th, 22nd, and 23rd Respondent filed on 12. 8.2021 brought under Section 95 Civil Procedure Act Cap 21, Order 50 Rule 6 Civil Procedure Rule 2010, Section 74 Cooperative Societies Act Cap 490, Article 159 (1) d Constitution of Kenya 2010 and all other enabling laws .

The same seeks for orders :1. Spent2. That the Honourable Tribunal be pleased to grant the Applicants leave to lodge an Appeal out of time against the Surcharge Orders issued by the Cooperative Tribunal at Nairobi on 28th May, 2021. 3.That this Honourable Tribunal be pleased to issue stay of any proceedings to enforce and/or relating to the Surcharge Orders issued by the Cooperative Tribunal at Nairobi on 28th May, 2021 pending the hearing and determination of this Application.4. That this Honourable Tribunal be pleased to issue stay of any proceedings to enforce and/or relating to the Surcharge Orders issued by the Cooperative Tribunal at Nairobi on 28th May, 2021 pending the hearing and determination of the Appeal to this Tribunal.5. That summons be issued to the Process Server Nornile O Goganyo to appear before this Honourable Tribunal for cross examination during the hearing of this Application.6. That the costs of this Application be borne by the Claimants/Respondents.The Application is premised on the grounds on the face of the Application stating that the Respondent/ Applicants intend to lodge an appeal against the impugned surcharge orders issued by the Commissioner of Cooperative Development on 28. 5.2021. That the Respondent/Applicants were not served with the surcharge order dated 28. 5.2021 and only learnt of it when served with Claimant’s Application dated 28. 5.2021 and Tribunal order dated 25. 6.2021. The Respondent/Applicants therefore wish to invoke the discretionary powers of the Tribunal to extend time to be allowed to lodge their appeal out of time.The Respondent/Applicants have a meritous Appeal and if not heard will be against their constitutional right to be heard.That further the surcharge orders from the Commissioner were an afterthought and creation of the Claimant in a clear attempt to mislead the Tribunal into aiding it unjustly enrich itself.The Applicants stand to be condemned unheard if the Application is not allowed to file the Appeal out of time.

10. The same is supported by the Affidavit of Simon Karagu Mbirua sworn on 11. 8.2021 reiterating the grounds above and more so number 5 of the Affidavit the Applicants state they were not served with the Surcharge Orders dated 28. 5.2021 and only learnt of their existence when served with the Claimant Application dated 28. 5.2021. That they have been told they are time barred in filing an Appeal as per section 74 (1) Cooperative Society Act which ought to have been filed 30 days from the Surcharge Order.That the Surcharge Orders from the Commissioner are an afterthought and Claimant is misleading the Tribunal into aiding it unjustly to enrich itself.The Claimant waited for 11 months to execute the same. That unless the Applicants are allowed to file their Appeal out of time and current proceedings they stand to be condemned unheard.

11. There is no response by the Claimant/Respondent for this Application therefore the same stands unopposed.We have thus considered the Application, the grounds and Supporting Affidavit. It is said the Claimants did not respond to the same moreso to the fact that the Surcharge Orders were never served upon the Applicants herein that is 1st, 4th, 5th, 7th, 10th, 12th, 15th, 17th, 22nd and 23rd Respondents.They seek to cross examine the Process Server therein. The main issue for determination is:Issue oneWhether the Applicants were served with Surcharge Orders?Issue twoWhether leave should be granted for them to file an Appeal out of time.?Issue oneWhether the Applicants were served with Surcharge Orders.Service is key in any court proceedings.The Applicants allege they were not aware of the Surcharge Orders against them and thus could not file their Appeal if at all.The Claimant /Respondent did not respond to the Application making it difficult to know if there was service if at all despite the Affidavit of Service annexed by the Applicants in their Application.

12. Issue twoWhether leave should be granted to the Applicants to file Appeal out of time.In the present case any appeal challenging the Surcharge Orders ought to have been filed on or before 30 days after service of the Surcharge Orders.The Applicants seek leave of court to do the same citing service was not done of the Surcharge Orders.Factors to consider before extension of time were set out in Edith Gichugu Koine -vs- Stephen Njagi Thoithi[2014] eKLR justice Odour JJA stated“nevertheless it ought to be guided by consideration of factors stated in many previous decisions of this court including , but not limited to the period of delay, the reasons for the delay, the degree of prejudice to Respondent if the Application is granted and whether the matter revises issues of public importance amongst others”.The ultimate duty of the Tribunal is to hear and determine dispute to the logical conclusions.We ask ourselves whether it would be fair to not give an opportunity to the Applicant’s to file/ventilate their dissatisfaction noting it is an Appeal?The Applicants state they did not know of the surcharge order thus could not file an Appeal. We would take the same with a pinch of salt noting there exists a Tribunal Appeal No. 1 of 2020 by other Respondents herein which means service must have been done on Respondents across the board.So as not to delabour the point we shall invoke article 50 Constitution of Kenya2010:“Every person has the right to have any dispute that can be resolved by the Application of law decided in a fair and public hearing before a court or, “There is nothing to evidence the Application is an afterthought and thus we shall give the Applicants a benefit of doubt and there is no evidence to demonstrate the Respondent will suffer harm if Application is allowed.We also note there is No Draft Memorandum of Appeal annexed which would cost the applicant in such a case. Be that as it may the Upshot of the above is:We shall allow the Application dated 11. 8.2021 in the interest of justice.That the Honourable Tribunal is pleased to grant the Applicants leave to lodge an Appeal out of time against the Surcharge Orders issued by the Cooperative Tribunal at Nairobi on 28th May, 2021 to be filed within 14 days of the Ruling.

13. The 3rd Application filed to file an Appeal in the case is dated 17. 8.2021 by the 2nd , 3rd, 6th, and 18th Respondent .The Application has been brought under article 159 Constitution of Kenya 2010, order 21 rule 12, order 22 rule 22, order 51 rule 1 Civil Procedure Rule section 1A, 1B and 3A Civil Procedure Act cap 21 ,section 74 Cooperative Societies Act and all other enabling provisions of the law.The Application seeks for orders:1. That this Application be certified as urgent and be heard ex parte in the first instant.2. That this Honourable Tribunal be pleased to stay the proceedings before it to enforce the Surcharge Orders issued by the Cooperative Tribunal at Nairobi on 28th May, 2021 against the 2nd , 3rd, 6th and 18th Respondents/Applicants pending the hearing and determination of this Application.3. That the 2nd , 3rd, 6th and 18th Applicants be allowed to defray the surcharge sums in monthly instalments of:a.Kshs. 50,000/- for the 2nd Respondent/Applicantb.Kshs. 10,000/= for the 3rd Respondent/Applicantc.Kshs. 10,000/= for the 6th Respondent/Applicantd.Kshs.15,000/= for the 18th Respondent/Applicant. Till payment in full.4. That the Tribunal be pleased to issue summons to the Process Server Nornille O. Goganyo to appear before this Honourable Tribunal for cross examination during the hearing of this Application.The same is premised on the grounds on the face of the Application and Affidavit of Margaret Wangari Mwangi to wit she states the Applicants did not admit to the charged amounts against them they expressed willingness to defray the amounts via monthly instalments despite the offers being made the Commissioner for Cooperative Development did not consider their proposal and only learnt the exists Surcharge Orders issued on 28. 5.2020 which were not served upon them.They seek to cross examine the Process Server Normile O. Goganyo of the averments in the affidavit of service and state the same are misleading.The Applicants are willing to defray the amounts surcharged to have peace of mind and put the matter to rest. The Applicants are not in a position to pay the amounts in bulk due to the harsh economic times.

14. The said Application is not opposed by the Claimants herein.We do note the 2nd, 3rd, 6th, and 18th Respondent have extended an olive branch to the claimants herein and want to pay via instalments.We are of the view the parties ought to have a sitting and set out the way forward.The Tribunal ought not to be dragged into the details of settling claims however, a consent if reached can be adopted as order of the Tribunal.The Claimant are entitled to their surcharged amounts and it would be unfair for the Tribunal to dictate how the same should be payable. We however note under order 21 rule 12 (1) and (2) Civil Procedure Rulethe court may:“(1)(1) where and in so far as a decree is for the payment of money, the court may for any sufficient reason at the time of passing the decree order that payment of the amount decreed shall be postponed or shall be made by instalments , with or without interest, notwithstanding anything contained in the contract under which the money is payable.(2)After passing of any such decree, the court may on the Application of the Judgment Debtor and with the consent of the decree-holder or without the consent of the Decree-holder for sufficient cause shown, order that the payment of the amount decreed be postponed or be made by instalments on such terms as to the payment of interest , the attachment of the property of the judgment- debtor or the taking of security from him, or otherwise, as it thinks fit.”We note the power to order payment by instalments of the decretal sum is purely a matter of consent by parties and discretion of the court.However, sufficient cause must be shown and indulgence to pay by instalment be on such terms as the court deems fit.In the case of Jabali Alidina – vs- Leitura Alidina [1961] EA 505 at page 566 that:“All commentators on the Civil Procedure Code agree that the courts discretion to order payment of the decretal amount in instalments is one which must be exercised in judicial and not an arbitrary manner. The onus is on the Applicant to show that he is entitled to indulgence under this rule.It is for the Applicant to show “sufficient reason” for indulgence being shown to him, and this court is immediately faced with difficulty in this respect, as the learned Magistrate has not stated what reasons put forward by the Applicant he considered sufficient to justify the exercise of the court’s discretion in the Applicant’s favour.”The other question would be are the amount proposed a fair portion of the surcharged amounts?We ask ourselves have the applicants that is the 2nd, 3rd, 6th, and 18th Respondents tried to make payment by instalments and been refused.There must be good will from both parties and for this reason the Application dated 17. 8.2021 is found to be without merit.

15. The last Application to be considered is Application dated 16. 9.2021 by the 8th, 11th, 13th, 16th, 19th, and 25th Respondent. The same was brought under order 1B,2B Civil Procedure Rule, section 3A Civil Procedure Act and all other enabling provisions of the law.The same seeks for orders :1. Spent2. That there be a stay of proceedings in this matter pending the hearing and determination of this Application.3. That there be a stay of proceedings of this matter pending the hearing and determination of Appeal No 1 of 2020 Joseph Mwangi Maina and 5 others versus the Commissioner for Cooperatives Development pending before this Honourable Tribunal.4. That the costs of this Application be provided for.

5. The Application is premised on the grounds on the face of the Application and Affidavit in support of Joseph Mwangi Maina. The said Application is not opposed and the issues therein have been canvassed while tackling the Application dated 28. 5.2021 thus the Application dated 16. 9.2021 does have merit and a stay of proceedings of this matter pending the hearing and determination of Appeal No 1 of 2020 Joseph Mwangi Maina and 5 others versus the Commissioner for Cooperatives Development pending before this Honourable Tribunal is hereby granted.prayer C is granted subject to the same being heard and determined within 90 days of this Ruling.Costs in the cause.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 18TH DAY OF FEBRUARY, 2022. Prepared by:Hon. J. Mwatsama Deputy Chairperson Signed 18. 2.2022Mr. P. Gichuki Member Signed 18. 2.2022Mr. B. Akusala Member Signed 18. 2.2022Tribunal Clerk R. LeweriMr. Muchiri Advocate holding brief for Mr. Gachoka Advocate for the ClaimantMr. Wachira Advocate for 1st, 4th, 5th, 7th, 10th, 12th, 15th, 17th, 22nd and 23rd Respondents.Ms. Ndanu holding brief for Mr. Gregory Advocate for 2nd, 3rd, 6th, and 18th Respondents.Ms. Ndanu- Application dated 17. 8.2021 30 days stay to Appeal.Mr. Muchiri Advocate- We request they file a formal ApplicationMr. Wachira: Not of concernTribunal : Respondent granted 14 days Stay of Execution.Hon. J. Mwatsama Deputy Chairperson Signed 18. 2.2022