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ELRCOtherNot stated in the material provided (suit underlying the judgment of 30.09.2014, Abuodha J)· [2016] KEELRC 1160 (KLR)

Meshack Kirimi Mwithimbu & 7 others v Liquidator Nkuene Farmers Co-operative Society Limited & 16 others [2016] KEELRC 1160 (KLR)

Employment and Labour Relations Court
27 May 2016
1,895 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that a co-operative liquidator—not the government or successor societies—must pay former employees' terminal dues of Kshs. 16.8 million by 1 September 2016.

What this practically means

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Executive summary

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By a judgment delivered on 30.09.2014 (Abuodha J), the court declared that the plaintiffs (claimants) were entitled to payment of their terminal dues as computed and agreed by the management committee, the liquidator and the plaintiffs, and directed that the order be served on the 1st and 2nd respondents, with the 2nd respondent to inquire into and report on the delay in payment within 60 days. The claimants then took out a notice to show-cause dated 14.04.2015 why warrants of arrest should not issue against the 1st and 2nd respondents for committal to civil jail in execution of the decree. In this ruling, the court found that the liability and duty to pay the claimants' terminal dues rests with the 1st respondent, the liquidator, because under the approved scheme of distribution the liquidator must verify and pay all creditors before distributing remaining assets to the emergent societies. The court rejected the claimants' figure of Kshs. 53,351,491.05 and the liquidator's suggestion of Kshs. 24,250,679.25, holding the amount due to be Kshs. 16,801,164.00 per the scheme of distribution, less amounts shown to have been paid, noting that the claimants' supporting exhibit was undated and of undisclosed source and that the respondents' evidence of prior payments was not before the court. Observing that the judgment was directive and declaratory rather than a money decree, the court declined to commit the respondents to civil jail but ordered payment by 01.09.2016, failing which interest at court rates would run from 05.05.2005, and required the liquidator to file within 30 days an affidavit of payments made and a time-bound scheme of arrangement. Each party was to bear its own costs of the notice to show-cause.

Key legal issues

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01

Liability for terminal dues in a co-operative liquidation

Holding

The liquidator, not the government or the emergent societies, bears the duty to pay the claimants' terminal dues as verified creditors of the dissolved society

Reasoning

The court relied on the scheme of distribution approved by the liquidation committee, in which the liquidator acknowledged the employees' benefits had been calculated and would be paid after disposal of fixed assets, and that the liquidator manages the affairs of the deregistered society until all legal obligations are satisfied, creditors verified and paid, and remaining assets distributed. The 2nd respondent's contention that the government or the new co-operatives should pay was rejected.

p. 4
02

Quantum due to the claimants

Holding

The amount due is Kshs. 16,801,164.00 as per the scheme of distribution, less any payments already made out of that sum

Reasoning

The court preferred the figure in the scheme of distribution approved on 09.11.2000 over the claimants' figures of Kshs. 24,250,679.25 and Kshs. 53,351,491.05, because the claimants' supporting document (exhibit MKM4) was undated and its source undisclosed. The respondents' assertion that Kshs. 11,046,869.00 had been paid was unsupported by evidence, so payments were to be established by the liquidator's affidavit.

p. 4
03

Interest on the decretal amount

Holding

No interest was awarded in the judgment, but interest at court rates from the date of the suit (05.05.2005) would accrue if the liquidator fails to pay by 01.09.2016

Reasoning

The court noted it had not made orders on interest in the judgment so the issue did not arise at that stage. However, since time had run and continued to run, and to compel expeditious payment, the court included in the final orders a default provision for interest at court rates from the date of the suit until full and final payment.

p. 4

Legal principles established

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  • In a liquidation under the Co-operative Societies Act, the liquidator must verify all creditors and pay them, and only remaining assets are distributed to the new societies; the liquidator bears the liability to pay employees' terminal dues

Court orders

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  1. 1.The liability and duty to pay the claimants' terminal dues as found due in the judgment rests with the 1st respondent, the liquidator
  2. 2.The amount due to the claimants from the 1st respondent is Kshs. 16,801,164.00 less money shown to have been paid to the claimants out of that sum
  3. 3.The 1st respondent to pay the amount due by 01.09.2016 failing interest at court rates from the date of the suit, 05.05.2005, till full and final payment
  4. 4.The 1st respondent to file in court within 30 days an affidavit setting out the schedule of money already paid to the claimants together with a time bound scheme of arrangement to pay the outstanding amount
  5. 5.The parties to mention the matter on a convenient date for further directions and orders
  6. 6.Each party to bear own costs of the notice to show-cause dated 14.04.2015

Authorities

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Legislation

  • Co-operative Societies ActSections 65 to 69
Jurisdiction invoked
Not expressly stated in the material provided; the ruling is made in execution/enforcement of the court's judgment of 30.09.2014 in the same suit

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, "Meshack Kirimi Mwithimbu & 7 others v Liquidator Nkuene Farmers Co-operative Society Limited & 16 others [2016] KEELRC 1160 (KLR)", Case Analysis (2016). Not stated in the material provided (suit underlying the judgment of 30.09.2014, Abuodha J). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1160/eng@2016-05-27

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