Warui & 2 others v Rwama Famers Cooperative Society Limited [2023] KECPT 1068 (KLR) | Cooperative Society Disputes | Esheria

Warui & 2 others v Rwama Famers Cooperative Society Limited [2023] KECPT 1068 (KLR)

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Warui & 2 others v Rwama Famers Cooperative Society Limited (Tribunal Case 383 of 2019) [2023] KECPT 1068 (KLR) (30 November 2023) (Judgment)

Neutral citation: [2023] KECPT 1068 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 383 of 2019

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

November 30, 2023

Between

James Njiru Warui

1st Claimant

Angelus Nderi Rumang’i

2nd Claimant

Samuel Muriithi Ngage and 239 others

3rd Claimant

and

Rwama Famers Cooperative Society Limited

Respondent

Judgment

1. The Claimant’s case is from the Claimant’s Statement of Claim dated 12/7/2019; Wherein the Claimants state that they are all members of the Respondent. The Claimants aver that vide HCCC No. 836 of 2003 Rwama FCS LTD Thika Coffee Millers, the Respondent was given judgement in its favor for Kshs. 15,097,783. 99/= plus costs and interest.The Claimants state that this Judgement was in respect of coffee proceeds of the Claimant to Thika mills ad where payment was never done to the Claimants after milling. The Defendants in HCCC No. 836 of 2003 preferred an Appeal against the judgement but the appeal was dismissed.

2. The Claimant states that the decretal sum of Kshs. 15,097,783. 99/= has earned interest to become Kshs. 27,500,000/=. The said money was released to the Respondent Society but it has failed/ refused and/or neglected to release the same to the members whose coffee proceeds were delivered to Thika Mills but not paid.The Claimant wants the Kshs. 27,500,000/= released to members and not be put to the Society use. The Kshs. 27,500,000/= be apportioned to the members for kilogram of cherry/coffee sold in the year 1997/98, 1998/99, and 1999/2000 coffee crop years.

3. In his witness statement dated 21/11/2022. The Claimant Society sued Thika Coffee Millers for unpaid Coffee proceeds for the period 1997/1998 to 2000/2001 coffee crop year.The Claimant prays for the Kshs. 24,163,000/= as at 30/3/2016 with the Respondent to be released to them and the coffee farmers who were not paid for this coffee for the period 1997/1998 to 2000/2001. During the hearing on 7/2/2023, the Claimant adopted his Witness Statement of 21/11/2022 as his evidence in chief. He also produced a List of Documents dated 25/5/2021 as his Evidence- in -chief.The Claimant prayed to be granted all his prayers as per the Amended Claim dated 21/11/2022.

4. On his Cross examination, the Claimant confirmed being a member of the Respondent since 1996. He stated that the Respondent was a split of the former Nzariams FCS LTD.He confirmed that Thika Coffee Mills was their millers. He stated that the Kshs. 27,500,000/= was for coffee deliveries but was not aware of the number of Kilograms delivered. On his part, he stated that he delivered 2,700 kgs and that the records are with the Respondent. He confirmed not having indicated the number of Kilo gram in his claim. He stated that he was not aware of the payment rate.He confirmed attending the Annual General Meeting of 1/4/2019 but stated that the minutes of the Annual General Meeting are not genuine since the meeting was disorderly.He denied knowledge of the Kshs. 27,500,000/= used by the Respondent for development. He confirmed that only the advocate fees was to be paid from the Kshs. 27,500,000/=.In the examination, the Claimant stated that he wanted the Tribunal to enforce the award from the Thika Coffee Millers case.He confirmed that all the Claimants in this case are alive.

5. In their Written Submissions of 28/7/2023, the Claimants state that the suit is filed by over 244 coffee farmers if the Respondent Cooperative Society.The Claimants are aggrieved by the non-payment of coffee proceeds for the period 1997/1998 to 2000/2001 amount to over Kshs. 27,000,000/=

6. The Claimant avers that the Respondent refused to pay the coffee farmers even after Thika Coffee Millers released the payment after a protracted legal battle, claiming that the monies would be used for development projects.The Claimant state that the Management Committee of the Respondent devoted members’ payment to their personal gain. the Claimants pray for judgement to be entered against the Respondent.

Respondent’s Case. 7. The Respondent case in contained in Reply to Statement of Claim dated 28/10/2020. The Respondent denies that the Claimants are members of the Cooperative Society.The Respondent avers that the Claimant just collected names of persons and filed the Claim on their behalf and without their authority, there are fifty-nine (59) of the alleged Claimants who subsequently withdrew their names from the claim rendering the Claim incompetent and fraudulent.

8. In his Witness Statement dated 28/1/2022, the Respondent Witness Mr. Julius Waweru stated that he confined convening on Annual General Meeting of the Respondent Cooperative to discuss the Kshs. 19,700,000/= to be received from Thika Coffee Millers.He confirmed calling a 2nd General Meeting to discuss the 2nd disbursement of Kshs. 8,000,000/=He stated that a proposal was discussed on how to expand the monies accruing from the court cases. The proposal was adopted in the 1/8/2019 meetings for implementation.

9. On 1/10/2020, an injunction was issued restraining the Respondent from utilizing the funds. By this time, the balance was Kshs. 1,255,660/=. This amount was available in the society’s account at time of the injunction.

10. The Respondents states that the Claimants have included deed functions in the list of Claimants.In a nutshell, the Respondents states that the monies being pursued by the Claimant have already been expired except for Kshs 1,255,660/=The 2nd Respondent witness Mr. David Mugo Kithongo in his Witness Statement dated 28/1/2020 confirmed he is the treasure of the Respondent,He collaborated the facts as contained in the 1st Respondent’s witness statement of 28/1/2022 and that he was in attendance in the General meeting that passed the utilization of Kshs 19,700,000/=He confirmed that the General Meeting confirmed the utilization of the coffee proceeds as below; 1. Muburi Coffee factory – Kshs. 3,000,000/=

2. Muthigiini Factory – Kshs. 3,000,000/=

3. Kimatu Buying Center – Kshs 3,000,000/=

4. Head office – Kshs 2,000,000/=

5. Workers arrears – Kshs. 1,000,000/=

6. Farmer Suppliers – Kshs. 1, 000,000/=

7. Cooperative Bank loan offset – Kshs. 4, 000,000/=

8. Revolving fund – Kshs. 2, 000,000/=

He therefore states that the Claimant’s Allegations are false and malicious

11. During the hearing on 8/6/2023, the Respondent was represented by two witnesses. The Respondent 1st Witness Julius Waweru Njoka confirmed he is the chairman of the Respondent. He adopted his statement of 28/1/2022 as his evidence in chief. He also adopted his List of Documents dated 28/6/2019 and his further list of 8/1/2022.

12. On cross examination, he confirmed joining the Respondent in 2005. He stated that Thika Millers were the Respondent’s millers and commission agents. He stated that member’s payments were done by Thika Mills.

13. He stated that he was not the chairman in 1997 to 2000 but can confirm payments from the records. He avers that records show there were payments, for example advances and rates.

14. He stated that some members were paid Kshs. 10/= and others Kshs. 2/= per kg. he stated that he was not aware of the total advances to farmers/members.

15. He confirmed he was aware of the High Court case 2003 against Thika Millers and the subsequent Kshs. 19,000,000/= plus interest award to the Respondents.

16. He confirmed that the agreed legal fee was Kshs. 8,200,000/= and that the general meeting agreed to pay legal fee of Kshs. 4,200,000/= and balances later.

17. On re-examination, the Respondent stated that the case was filed in 2003, 2 years before he joined the Respondent.He averred that the money awarded was not exclusive.

18. The 2nd Respondent witness Mr. David Mugo adopted his Witness Statement dated 28/1/2022 as his evidence in chief. He confirmed that he is a member of the Respondent since 1997.

19. On cross examination, he confirmed introducing their advocate to the Thika Coffee Millers for members’ coffee money for the period 1997-2000.

20. He stated that the Kshs. 19,000,000/= award was not part of coffee rates. The award was explained to members in the 30/1/2019 General Meeting.

21. He stated that the members passed the utilization proposal. He reiterated that the court award was not for coffee payment.

22. On re-examination, the Respondent confirmed he was the treasurer from 2000-2002. He stated that the Respondent was seeking money for coffee for the period of 1997 to 2000 but the arbitrator in the case stated that there was no money owed to the Respondent by Thika Coffee Millers.

23. He confirmed that he was a coffee farmer and that he was paid for his coffee delivery. He stated that individual member coffee deliveries were not available in the office.

24. In the Respondent’s written Submissions dated 19/12/2019, the Respondent gave a background of the case in court. The case High Court Civil Case o 836 of 2003, Rwama FCS LTD Vs Thika Coffee Millers Ltd in favor of the Respondent.

25. The Respondent refers this court to issues for determination v12: -a.Whether monies sought by the Claimants should be released to them.b.Whether an order of temporary injunction should be granted against the Respondent.c.Whether the Claimant’s Application is merited.

26. The Respondent states that the Claimant’s expectation that the award will be released to them is misguided since the money is already spent.

27. Secondly, the Respondent is unable to get the production records of members to ascertain each members’ production.

28. The Respondent also states that the general meeting approved the award money to be used for development and improvement of the Respondent.

29. The Respondent alleges that the Claimants falsified documents in favor of Thika Coffee Millers.

30. The Respondent states that it is not possible to release the said award money to the Claimants.

31. The Respondent states that some 59 members in the Claimants have disassociated themselves from the claim. The Respondent makes reference to one James Njiru Warui the Claimant who was also the first propose on the utilization of funds.

Findings. 32. During the court proceedings, the claimant and Respondent were in agreement that the Respondent received Kshs. 27,000,000/= from Thika Coffee Mills Limited. What was contested by the Claimant was the utilization of the award money. The Claimant argued that the award money was for members’ payment for the period of 1997/1998 to 1999/2000 coffee year. They argued that the members were not paid for this coffee production for the mentioned years.

33. We observe that the Claimant’s basis for their claim is for the award money to be paid to the members of the Respondent.

34. We note that the Claimant did not provide adequate members production records to justify their assertion that the Kshs. 27,000,000/= was for members after payment.

35. The memorandum submitted by the Claimant has been discredited by the Respondent’s assertion that 59 of the signatures have withdrawn from the suit list which was a critical annex to the Claimant’s memorandum. The 59 signatures wrote to withdraw their signatures alleging that their signatures were used fraudulently.

36. On their part, the Respondents admit that the award money from Thika Coffee Millers was received but was not meant to be members payment.

37. They tabled Annual General Meeting authority to utilize the award money for renovation and development of the Respondent’s facilities.

38. The Respondent’s authority to utilize the award monthly is contained in Annual General Meetings of 1/4/2019 and 1/8/2019.

39. We note that the Claimant has not adequately proved that the award money was for the coffee production for the years 1997/1998 to 1999/2000 coffee years.

40. The Claimant did not adequately respond to the withdrawal of 59 of the members who had signed the Claimant memorandum.

41. We also find that the Respondent has submitted adequately regarding how the award money was utilized and the appropriate authorities and approval therein.

42. The authority to spend the award money are contained in the Respondent’s Annual General Meeting minutes of 1/4/2019 and 30/1/2019. The Respondent has also stated that they did not have any coffee members’ production records, hence rendering the Claimant’s demands impossible to implement.

43. We note that the Respondent convened an Annual General meeting on 30/1/2019 where the award money was discussed under the agenda “Chairman’s report”.

44. The issue of the award money being paid to the members featured during the discussions but the way forward was deferred to a subsequent general meeting to be convened by the Respondent Board to discuss the award money.

45. We also observe that during the subsequent Special General Meeting held on 1/4/2019, the utilization of the award money was the main agenda of the meeting. In this meeting the members unanimously agreed to adopt the Respondent’s board proposal to utilize the award money for development of the Respondent’s facilities among others. The Respondent’s Board had apportioned the money as hereunder: 1. Muburi Coffee factory – Kshs. 3,000,000/=

2. Mutigi-ini Factory – Kshs. 3,000,000/=

3. Kimatu Factory – Kshs 3,000,000/=

4. Head office – Kshs 2,000,000/=

5. Workers arrears – Kshs. 1,000,000/=

6. Suppliers – Kshs. 1, 000,000/=

7. Cooperative Bank loan – Kshs. 4, 000,000/=

8. Revolving fund – Kshs. 2, 000,000/=

Conclusion. 46. In view of the above findings and the proceedings, we are of the opinion that the Claimant did not submit adequate documents to prove that in deed the members were not paid for the coffee production for the years 1997/1998 to 2000/2001.

47. The Claimant did not provide documents to show the coffee production per member for the same period which would have neem a critical evidence to justify the Claim.

48. During the 30/1/2019 and 1/4/2019 members’ meetings, the Claimants issue of payment to members from the award money was discussed and ultimately determined during the 1/4/2019 general meeting. Considering that the annual general meeting is supreme authority of the Respondent Cooperative, it is our opinion that the Respondent’s proposal to utilize the award money for developments and not members’ payments was duly approved.

49. Whether the members’ decision in the two general meetings were prudent in circumstantial. We would want to believe that the members were adequately informed in the weighty agenda they were discussing in the two general meetings, especially the one of 1/4/2019.

50. The Respondents have filed adequate evidence to prove their decision to utilize the award money for development and not as prayed by the Claimant.

51. Having considered the evidence on record, we find that the Claimants have not proved their case to the required standards, which is on a balance of probabilities. We hereby dismiss the same with no orders as to costs.

JUDGMENT SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF NOVEMBER, 2023. HON. BEATRICE KIMEMIACHAIRPERSONHON. J. MWATSAMADEPUTY CHAIRPERSONHON. BEATRICE SAWEMEMBERHON. FRIDAH LOTUIYAMEMBERHON. PHILIP GICHUKIMEMBERHON. PAUL AOLMEMBERHON. MICHAEL CHESIKAWMEMBER