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ELCStruck OutNot stated in judgment· [2017] KEELC 512 (KLR)

Wiseborn Industries (K) Limited v Fortune Sacco Society Limited [2017] KEELC 512 (KLR)

Environment and Land Court
24 November 2017
BOB. N. Olao
1,399 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Environment and Land Court struck out a borrower's suit against a co-operative society, confirming loan disputes between societies and members belong at the Co-operatives Tribunal.

What this practically means

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Executive summary

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The plaintiff company filed suit on 9th May 2017 seeking a declaration that the defendant co-operative society's statutory power of sale over titles BARAGWE/RAIMU/2366, 2389 and 3282 had not crystallized, together with a permanent injunction against sale of the suit properties, on the basis that its director was a shareholder of the society and that the plaintiff's inability to service its loan was due to stock destroyed by Government agencies, with the plaintiff now back in profit. The defendant filed a preliminary objection contending that the court lacked jurisdiction under the Co-operative Societies Act because the dispute is between a society and its member, which by Section 76 must be referred to the Co-operatives Tribunal. The court found, on an unrebutted share statement, that it was the plaintiff itself which held shares as a member of the defendant, bringing the dispute within Section 76(1)(b). Applying the Lillian S principle that a court without jurisdiction must lay down its tools, the Gatanga Coffee Growers expansive reading of the 'business of the Society', and the Karume principle that statutory procedures must be followed, the court held that the Tribunal established under Section 77 was the proper forum, with an appeal lying to the High Court under Section 81, consistent with Article 159(2)(c). The preliminary objection was upheld, the suit struck out with costs to the defendant, and leave to appeal was granted.

Key legal issues

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01

Whether the ELC has jurisdiction over a dispute between a co-operative society and its member over loan repayment and threatened exercise of statutory power of sale

Holding

The court lacks jurisdiction; the dispute must be referred to the Co-operatives Tribunal under Section 76(1)(b) of the Co-operative Societies Act

Reasoning

The plaintiff itself is shown by an unrebutted share statement to hold shares as a member of the defendant society. The dispute over the loan and the threatened sale of charged land concerns the business of the society. Section 76(1)(b) requires such disputes between a member and the society to be referred to the Tribunal established under Section 77, with an appeal lying to the High Court under Section 81. Following the principle in the Lillian S and Karume cases, where a statute provides a specific forum, that procedure must be followed, consistent with Article 159(2)(c).

p. 3

Legal principles established

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  • Without jurisdiction, a court must lay down its tools
  • Where a statute has provided a forum for grievances, courts must be hesitant to assume jurisdiction and should allow the statutory body to handle the dispute
  • Where there is a specific procedure provided by law for addressing specific grievances, that procedure should be followed
  • The term 'business of the Society' is not to be defined in a restricted manner but covers every activity of the Society within the ambit of its by-laws and rules

Court orders

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  1. 1.The suit is struck out with costs to the defendant
  2. 2.Leave to appeal is granted to the plaintiff

Authorities

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Legislation

  • Co-operative Societies ActSection 76(1), 76(2)
  • Co-operative Societies ActSection 77
  • Co-operative Societies Act (Chapter 490 Laws of Kenya)Section 81
  • Constitution of KenyaArticle 159(2)(c)

Cases cited (3)

  • OWNERS OF THE MOTOR VESSEL 'LILLIAN S' VS CALTEX KENYA LTD
    1989 K.L.R 1
  • GATANGA COFFEE GROWERS CO-OPERATIVE SOCIETY LTD VS GITAU
    1970 E.A 561
  • THE SPEAKER OF THE NATIONAL ASSEMBLY VS KARUME
    2008 1 K.L.R 426
Jurisdiction invoked
Co-operative Societies Act (Cap 490), Sections 76, 77 and 81; Article 159(2)(c) of the Constitution

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Wiseborn Industries (K) Limited v Fortune Sacco Society Limited [2017] KEELC 512 (KLR)", Case Analysis (2017). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/512/eng@2017-11-24

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