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ELCPartially AllowedTribunal Case No. 150 of 2020 (Appeal therefrom)· [2021] KEELC 4525 (KLR)

Muka Mukuu Farmers Cooperative Society Limited v Stephen Mwanzia Kithuka & 2 others [2021] KEELC 4525 (KLR)

Environment and Land Court of Kenya at Machakos
29 January 2021
3,226 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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This is a ruling on two interlocutory applications arising from an appeal against a Ruling of the Cooperative Tribunal in Nairobi Tribunal Case No. 150 of 2020 delivered on 9th July 2020. The Tribunal had confirmed ex-parte interim orders restraining the Appellant Society's Management Committee from prequalifying bidders, tendering, leasing or charging approximately 600 acres of Society land for quarrying, and freezing the Committee's dealing with the Society's accounts and finances, pending determination of the legality of the Committee's membership. By a Notice of Motion dated 3rd August 2020, the Appellant sought a stay of execution of that Ruling and a stay of the Tribunal proceedings pending appeal; by a further motion dated 21st September 2020, it sought leave to access its accounts to receive payments and run its affairs. The court, applying Order 42 Rule 6(2) of the Civil Procedure Rules and the substantial-loss test in Kenya Shell Ltd and Butt v Rent Restriction Tribunal, declined to engage the merits of the appeal. It held the Appellant would suffer no substantial loss from staying the quarry lease, given quarrying's irreversible effects on land, while the Respondents and the membership would suffer loss if the Committee were later found to be illegally in office. The court dismissed the stay application, refused a stay of proceedings, but granted limited access to the Society's accounts solely for payment of salaries, wages, utility bills and statutory deductions pending the appeal. Each party was to bear its own costs, save that the first motion was dismissed with costs. The ruling was delivered at Machakos on 29th January 2021 by O.A. Angote, Judge.

Key legal issues

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01

Substantial loss for stay of execution under Order 42 Rule 6(2)

Holding

No substantial loss to the Appellant; the stay of the quarry lease causes no loss while the Respondents and members would suffer loss if the illegally-constituted committee dealt with the land

Reasoning

The court, guided by Kenya Shell Ltd and Butt v Rent Restriction Tribunal, weighed whether the appeal would be rendered nugatory. Since the Appellant's Management Committee had proposed to lease about 600 acres for quarrying, and quarrying has irreversible consequences on land, staying the lease pending appeal causes the Appellant no substantial loss, whereas the Respondents and membership would suffer if the committee's legality is later impugned.

p. 4
02

Interim freezing orders versus payment of salaries and statutory deductions

Holding

The Management Committee, whose legality is yet to be determined, cannot deal with the finances generally, but may access accounts solely to pay salaries, wages, utility bills and statutory deductions

Reasoning

The court held that whether the Committee is legally in office is for the Tribunal, and until then it cannot deal with finances and accounts generally. However, salaries and statutory deductions fall due irrespective of the outcome and cannot await determination of the appeal, so a limited carve-out was granted consistent with the interim orders of the Tribunal.

p. 4
03

Stay of proceedings before the Tribunal

Holding

Stay of proceedings declined; the parties should proceed expeditiously per the Tribunal's directions

Reasoning

The Tribunal had directed parties to file witness statements and documents within 21 days and to have the claim heard and concluded expeditiously on a priority basis within 60 days. In view of those directions, the court declined to stay proceedings, holding the parties should abide by them and ventilate their respective cases expeditiously.

p. 4
04

Merits of the pending appeal at interlocutory stage

Holding

The court declined to delve into the merits of the appeal, confining itself to the stay criteria

Reasoning

Although the parties argued the merits of the pending appeal at length, including the legality of the Management Committee and compliance with the by-laws, the court held that those issues should be dealt with when hearing the appeal, and at this stage only the stay criteria (substantial loss, delay, security) fell for determination.

p. 4

Legal principles established

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  • Substantial loss is the cornerstone of the jurisdiction for granting stay of execution pending appeal
  • A court exercising discretion on stay ought to ensure the appeal, if successful, is not rendered nugatory
  • An interim order does not bar payment of employee salaries and statutory deductions, which fall due irrespective of the dispute

Court orders

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  1. 1.The Notice of Motion dated 3rd August, 2020 is dismissed with costs
  2. 2.Pending the hearing and determination of the Appeal, the Appellant, its authorized agents, officials and or employees may access the Appellant's bank accounts and finances for the purpose of paying outstanding and continuing salaries, wages, utility bills and statutory deductions only, and not for any other purpose not specified in the order
  3. 3.Each party to bear its own costs

Authorities

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Legislation

  • Civil Procedure RulesOrder 42 Rule 6(2)
  • Civil Procedure RulesOrder 11
  • Co-operative Societies ActSection 58
  • Co-operative Societies ActSection 27(1)
  • Co-operative Societies ActSection 28

Cases cited (6)

  • Giella vs. Cassman Brown
    (1973) EA 358
  • Kenya Shell Limited vs. Benjamin Karuga Kigibu & Ruth Wairimu Karuga
    (1982-1988) 1 KAR 1018
  • Butt vs. Rent Restriction Tribunal
    [1979] eKLR
  • Wilson v Church (No 2)
    12 Ch D (1879) 454
  • Erinford Properties Limited v Cheshire County Council
    [1974] 2 All ER 448
  • Attorney General v Emerson and Others
    24 QBD (1889) 56
On appeal from
Cooperative Tribunal, Nairobi
150 of 2020
Jurisdiction invoked
Appellate jurisdiction over decisions of the Cooperative Tribunal under the Co-operative Societies Act; application brought under Order 42 Rule 6(2) of the Civil Procedure Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Muka Mukuu Farmers Cooperative Society Limited v Stephen Mwanzia Kithuka & 2 others [2021] KEELC 4525 (KLR)", Case Analysis (2021). Tribunal Case No. 150 of 2020 (Appeal therefrom). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/4525/eng@2021-01-29

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