Republic ex parte Kenya Planters Co-operative Union v Commissioner For Co-operative Development & 2 others [2020] KECA 604 (KLR)

Court of Appeal

5 June 2020

W. Ouko ASAsike-Makhandia JMJ. Mohammed

2,836 words in judgment

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The bottom line

Kenya's Court of Appeal ruled that KPCU remains a co-operative society subject to the Commissioner's powers, because a shareholders' resolution alone cannot dissolve co-operative status.

What this practically means

Executive summary

The Court of Appeal dismissed an appeal by Kenya Planters Co-operative Union (KPCU) against a High Court judicial review judgment in which Korir, J had quashed the Commissioner for Co-operative Development's letters of 11 June 2014 and 25 June 2014 convening a special general meeting and elections, on the ground that the statutory 15 days' written notice to members was not given. KPCU appealed only against the High Court's finding that, although dually registered under the Companies Act and the Co-operative Societies Act, it was a co-operative society subject to the Commissioner's jurisdiction. The Court traced KPCU's history: incorporated as a limited liability company on 2 June 1945 under the Companies Ordinance of 1933 and simultaneously registered as a co-operative society, enjoying special exemptions. The 1997 amendment to section 95 of the Co-operatives Act barred companies from operating as co-operatives, and Gazette Notice No. 3099 of April 2005 revoked KPCU's exemptions, forcing it to elect one status. The Court held that a shareholders' resolution of 30 July 2014 to operate as a company was insufficient; KPCU could exit only through the statutory dissolution process under section 61(5), which it had not commenced, nor had the Commissioner cancelled its registration. KPCU therefore remains under dual registration and subject to the Co-operative Societies Act. The appeal was dismissed with costs. On a first appeal, the Court conducted a fresh and exhaustive examination of the evidence, applying the Peters v Sunday Post standard.

Key legal issues

Corporate character of the appellant - company or co-operative society

Holding

The appellant remains under dual registration as both a company and a co-operative society, and is governed by the Co-operative Societies Act.

Reasoning

The appellant was incorporated under the Companies Ordinance of 1933 and also registered as a co-operative society in 1945, enjoying exemptions. The 1997 amendment to section 95 of the Co-operatives Act prohibited a company from operating as a co-operative society, and Gazette Notice No. 3099 of 29 April 2005 revoked the exemptions. The appellant was thereby required to elect one status, but has not commenced dissolution under section 61(5) nor had its registration cancelled, so it remains under the Co-operative Societies Act. The High Court's finding was correct.

p. 4

Commissioner's jurisdiction over the appellant

Holding

The Commissioner had jurisdiction over the appellant's affairs, including power to convene an SGM and call elections.

Reasoning

Having found the appellant remains registered as a co-operative society, the Court affirmed the High Court's conclusion that sections 3, 27(8), 27(10) and 93A of the Co-operative Societies Act conferred on the Commissioner the power to call for a special general meeting and elections. The appellant's own Memorandum and Articles constitute regulations for the purposes of the Co-operative Societies Act.

p. 2

Standard of review on first appeal

Holding

On a first appeal the court subjects the evidence as a whole to a fresh and exhaustive examination to reach its own independent conclusion.

Reasoning

The Court restated the classic first-appeal standard, appreciating that the trial court had the advantage of hearing and seeing witnesses, citing Peters v Sunday Post. It applied this standard to re-evaluate the evidence on the appellant's corporate status before agreeing with the High Court's construction of the statutes.

p. 3

Legal principles established

An entity cannot operate simultaneously as a company and a co-operative society under the current legal regime; dual registration is untenable.
A co-operative society can only exit the Co-operative Societies Act regime through the statutory dissolution process; a shareholders' resolution alone is insufficient.

Court orders

1.Appeal dismissed
2.Costs of the appeal to the respondents

Authorities

Legislation

Co-operative Societies Actsection 27(5)
Co-operative Societies Actsection 27(8) and (10)
Co-operative Societies Actsection 3
Co-operative Societies Actsection 93, 93A(a) and (b)
Co-operative Societies Actsection 61(5)
Co-operative Societies Actsections 62 and 65
Co-operative Societies Actsection 95(1)
Co-operative Societies Actsections 58 and 59
Co-operative Societies Ordinance of 1931
Co-operative Societies Ordinance of 1945
Companies Act
Companies Act, Cap 486sections 64 and 71
Companies Ordinance of 1933
Registration of Business Names Act, Cap 499

Cases cited (1)

Peters vs. Sunday Post
(1958) E.A 424

On appeal from: High Court at Nairobi; JR. Misc. Civil Application No. 312 of 2014
Jurisdiction invoked: First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction over High Court judicial review decisions

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Republic ex parte Kenya Planters Co-operative Union v Commissioner For Co-operative Development & 2 others [2020] KECA 604 (KLR)", Case Analysis (2020). Civil Appeal No. 367 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/604/eng@2020-06-05

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.