Meshack Kirimi Mwithimbu & 7 others v Liquidator Nkuene Farmers Co-operative Society Limited & 16 others [2016] KEELRC 1160 (KLR)
The bottom line
#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
#Executive summary
#Key legal issues
#Liability for terminal dues in a co-operative liquidation
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
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.
Quantum due to the claimants
The amount due is Kshs. 16,801,164.00 as per the scheme of distribution, less any payments already made out of that sum
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.
Interest on the decretal amount
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
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.
Legal principles established
#- 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
#- 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.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.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.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.The parties to mention the matter on a convenient date for further directions and orders
- 6.Each party to bear own costs of the notice to show-cause dated 14.04.2015
- 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
#Practical implications
#Frequently asked questions
#Cite this brief
#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.