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Kumi Co-operative Ltd v Ralulu [2009] FJMC 16; Civil Case 92.2008 (26 August 2009)

IN THE FIRST CLASS MAGISTRATE’S COURT
AT NAUSORI
FIJI ISLANDS

Civil Case No. 92 of 2008

KUMI CO-OPERATIVE LIMITED
Plaintiff

V

1. VILITATI RALULU
2. SITIVENI TOKALAUSA
Defendants

Before: C. LAKSHMAN
Resident Magistrate

For Plaintiff: Mr. V. Daveta
Defendant 1: Present
Defendant 2: Present
For the Defendants: Mr. Sunil Kumar (for both the Defendants)

JUDGEMENT

Introduction

1). On 17th December 2008., the plaintiff, Kumi Co-operative Limited, of Kumi village, Verata, Tailevu filed an Ex-Parte Notice of Motion seeking orders that the 1st defendant, Vilitati Ralulu be restrained from transferring and do forthwith release – Mazda Tray Truck, Registration No: LC19, Engine No.SL281994, Chassis No. JM6WHL4T100100522 to the plaintiff.

2). In support of the Ex Parte Notice of Motion an affidavit was filed by Aisea Ravasakula, the Chairman of Kumi Co-operative. In the affidavit the deponent stated that the 2nd Defendant was the previous Chairman of Kumi Co-operative and on or about May 2007 the 2nd Defendant without consulting the members sold the truck to the 1st Defendant. He further stated that the members did not authorize and were not consulted on the sale.

3). The deponent stated that the vehicle was owned by the Co-operative and annexed a letter from LTA. The deponent further stated that the truck was used by the members of the Co-operative to transport vegetables supplies to Suva market and was the only mode of transport.

4). A writ of summons was also filed on 17th December 2008, which commanded the Defendants to attend Court on 20th January 2009.

5). The Court upon hearing counsel for the Plaintiff on 17th December 2008 ordered:

i). That 1st Defendant be restrained from transferring and do forthwith release the Mazda Truck Registration No. LC19 to the Plaintiff.

ii). That police assist in execution of the order

iii). That case be adjourned to 18th December 2008 for Mention.

6). On 18th December 2008, the case was adjourned to 20th January 2009. The Plaintiffs and the 1st Defendant appeared. The 1st Defendant sought time to get a solicitor and seek advice. Plaintiff by then was to serve the 2nd Defendant.

7). On 3rd February 2009, the 1st Defendant filed an Inter Parte Notice of Motion with an affidavit in support of the 1st Defendant to seek to dissolve the order of the Court made on 17th December 2008.

8). The 1st Defendant in his affidavit stated that he was approached by the Plaintiff to pay $2,000.00 to FDB on 18th May 2006 to have the truck released from FDB. On 19th May 2006, the truck was released by FDB. On 22nd May he had the truck repaired at a cost of $1,802.12.

9). On, 26th May 2006, the Plaintiff executed a Sale and Purchase Agreement for the truck in favour of the 1st Defendant. The 1st Defendant from that date onwards operated a carrier business until the truck was repossessed through a Court Order.

10). The 1st Defendant in his affidavit deposed that since his taking possession of the truck he incurred expenses in the sum of $6,004.75. He further claimed that he had been making monthly installments to FDB from 26th May 2006 until 22nd December 2008 which amounted to $21,005.00.

11). The 1st Defendant further claimed that he incurred loss of $100.00/day due to the seizure and repossession of the truck by the Plaintiff.

12). On 3rd February 2009 the Solicitor for the 1st Defendant also filed a statement of defence.

13). The Court on the 12th day of February 2009, upon reading the Inter Parte Motion and Affidavit in support and upon hearing counsel for the 1st Defendant and there being no appearance of the Plaintiff or his counsel ordered that there be order in terms of motion dated 29th January 2009 and the Plaintiff was to return the truck to the 1st Defendant in working condition and the case was adjourned to 3rd March 2009 for general review.

14). On 19th February 2009 the Plaintiff filed an Inter Parte Notice of Motion and affidavit in support so that they could be heard to set aside the Court’s decision of 12th February 2009.

15). On 3rd March 2009, the Court queried who had physical possession of the truck. The Counsel for the plaintiff stated that the truck was with the plaintiff and in working order in the village. The keys were with the driver, Lote Matetagi.

16). The Court ordered the Plaintiff to get the truck and the keys to Court on 4th March 2009. On 4th March 2009, the Court informed the parties that "any party interfering with the 12th February 2009 Court order is to be reported to the Court. "

17). The Court gave the Plaintiff time to file and serve his affidavit in reply to the 1st Defendant’s affidavit dated 30th January 2009.

18). The Plaintiff on 12th March 2009 filed a reply to defence and a counter claim. On the same day they filed an Affidavit in Opposition to the 1st Defendant’s affidavit dated 30the January 2009.

19). The 2nd Defendant on 18th March 2009, filed his statement of defence. On 24th March 2009, the 2nd Defendant filed an affidavit.

20). On 27th April 2009, the Plaintiff filed a response to the Affidavit of the 2nd Defendant and an Affidavit in Opposition. The Defendant’s solicitor on 28th May 2009 filed answers to the response of the Plaintiffs affidavit of the 1st and 2nd Defendant’s. This was the affidavit of Ravuama Vakatuturagania.

21). On the 3rd July 2009, the Plaintiff filed a Motion to include Ravuama Vakatuturagania as a 3rd Defendant. An affidavit in support was also filed.

22). The Court on 7th July 2009, granted the Plaintiff as per its motion to include Ravuama Vakatuturagania as the 3rd Defendant. The Defendant’s objected to the motion and cited it was a delaying tactic. The Court set the matter for Hearing on 22nd July 2009.

The CLAIM

The Plaintiff sought that:

(a) the Defendants whether by himself, his servants, agents, legal representative be restrained from transferring Mazda Tray Truck, registration Number LC19, Engine number SL281994, chassis number JM6WHL4T100100522.

(b) The Defendants whether by him-selves, his servants, agents, legal representative do forthwith release Mazda Tray Truck, registration Number LC19, Engine number SL281994, chassis number JM6WHL4T100100522 to the plaintiff.

(c) That police officers to assist in the execution.

(d) Costs, and

(e) Such further and/or other relief as this honourable court may deem just.

The Defendant in return sought that Plaintiffs action be dismissed.

HEARING

In his opening address the Counsel for the Plaintiff stated that this matter was a claim for the vehicle bought by the 1st Defendant. The previous Chairman of Co-operative acted outside the powers of the Co-operative Act (Cap 250) and outside the powers of the by-laws of the Co-operative. He further stated that the previous Chairman of the Co-operative made an agreement with the 1st Defendant to purchase the Co-operative vehicle. The Plaintiff alleged it was illegal action by 2nd Defendant as he acted outside his powers to sell the vehicle to the 1st Defendant.

The Defendants Counsel in opening stated that Co-operative had no by-laws and none were given to the Court. He argued that there was a duly stamped sale and purchase agreement signed by the Chairman and Secretary of the Kumi Co-operative for the sale of the vehicle to the 1st defendant. The vehicle was seized on 22nd May 2006 by Fiji Development Bank and the 1st Defendant has paid $21,000.50 to Fiji Development Bank.

The 1st Defendant used $6,004.75 to pay for maintenance of the vehicle. The Counsel for the Defendants stated that the 1st Defendant bought vehicle under a Sale and Purchase Agreement and took over the loan that the Co-operative was paying to Fiji Development Bank and when the loan was near completion the vehicle was seized from the 1st Defendant with a Court Order. The counsel for the Defendants further pointed out that the Plaintiff had not filed and served any documentation to include the 3rd Defendant. There was no claim against the 3rd Defendant and no amended Statement of Claim.

The Court drew to the attention of the Plaintiffs Counsel, the need to file and serve on the 3rd Defendant as ordered on 7th July 2009. The Counsel for the Plaintiff agreed to continue with the hearing without filing and serving the 3rd Defendant and to include him as a party to the action.

The Plaintiffs Case

The Plaintiffs only witness was Aisea Ravasakula (P-1) who gave sworn evidence. He told the Court that he is the Chairman of Kumi Co-operative Limited. He took over as Chairman in July 2008.

P-1, told the Court that the Co-operative had a meeting due to the running of the Co-operative and the previous Chairman was asked to step down. The previous Chairman moved his name to be the new Chairman. P-1 told the Court that the Co-operative owned a Carrier and a shop, Carrier is 3 ton and registration number LC19. Carrier was for use by the members to transport produce. P-1 acknowledged that a letter from Fiji Development Bank was sent to the Co-operative for outstanding sum to be paid and that $2,000.00 plus was owed.

P-1 further told the Court that previous chairman (2nd Defendant) had word with 1st defendant for the 1st defendant to buy the carrier. The members of Co-operative did not know of this conversation. They did not know of the agreement.

The members wanted the carrier back and they engaged lawyer to get the carrier.

P-1 stated that the Co-operative made payment after 17th December 2008 to Fiji Development Bank. They made payment in January, February and March 2009 totaling $2,000.00. P-1 told the Court that the truck is with the 1st defendant and registered under Kumi Co-operative. P-1 acknowledged that outstanding payment of $8,000 when he took over as Chairman.

In cross examination P-1 told the Court that the arrears were not fully paid as money was used. He did not know what money was used for by the previous Chairman. When there were arrears he was not Chairman. The committee members were entitled to deal with the issue.

P-1 had no knowledge what transpired in meetings of the Co-operative. The Kumi Co-operative Committee members decided on the running of the Co-operative. There was no Board of Directors. The committee decided for the betterment of the Co-operative.

The P-1 could not recall when the vehicle was seized but the vehicle according to him was released 1 week after the then Chairman had conversation with the 1st Defendant.

The vehicle was seized by the Bank (FDB) because of the outstanding payment. When the vehicle was seized the 1st Defendant made payments until they got a Court Order.

P-1 could not in cross examination state if the previous Chairman worked within the by-laws because he did not have a copy of the By-Laws.

P-1 acknowledged that the Sale and Purchase was signed by the previous Chairman and Secretary. However he viewed it as personal and not for the Co-operative.

As to the minutes of the meeting P-1 stated only 2 members were present, the minutes were with the counsel and he did not read it.

P-1 told the Court that the Secretary who signed the Sale and Purchase is still the Secretary.

The Co-operative will soon take action against the Secretary. The Secretary has lost the minutes. The Co-operative made minutes for the seizure of the van but the Secretary lost it.

In re examination, P-1 stated that at the last meeting of the Co-operative in September 2008 it was agreed to look for the vehicle. He was not aware of other earlier meetings. P-1 further stated that he did not know what transpired at the meetings on the sale of the vehicle.

The Court asked Plaintiffs counsel if he wanted to change statement of claim before the close of his case. He answered in the negative.

The DEFENDANTS Case

The Defendants called as its first witness, Vilitati Ralulu (D-1), the first Defendant. D-1 gave sworn evidence. He could not recall when the vehicle was seized. He further stated that he filed a motion and affidavit on 3rd February 2009 to seek the release of the truck and that he stands by the affidavit as his evidence.

Upon cross examination D-1 stated that he signed the sale and purchase agreement on 26th May 2006. He further stated that he was approached by the Chairman and the Secretary of the Kumi Co-operative and they discussed and came to an agreement for him to buy the truck. They (Chairman and Secretary) were acting to save the name of the Co-operative by what they were doing. They went back to discuss with the Board in the village.

He further in cross examination stated that one was the Chairman and the other a Secretary and held position in Kumi Co-operative. D-1 was not aware of the Co-operative Laws on buying of the vehicles. D-1 started a carrier business after the vehicle was bought and he incurred costs for maintenance of the vehicle. The vehicle was still registered under Kumi Co-operative and that D-1 had made payments around $21,005.00 to FDB. More than 90% of the payment was made from the income of a minibus that he owned.

In re-examination D-1 stated the following:

- "by signing the agreement he understood that FDB took the truck from Kumi and that he agreed on the term with Kumi management that I take over payment and I paid arrears to FDB ($2000). I gave this money to the Chairman to pay FDB.

- Sale and purchase agreement is a sealed and a legal document.

- It was a business discussion and dealing with the Chairman and Secretary of Kumi.

- I was working and my salary was deducted towards the mini bus and the minibus income was used to pay for the carrier."

The second witness for the defendants was the 2nd Defendant, Sitiveni Daunivalu Tokalausa (D-2). D-2 gave sworn evidence. He informed the Court that he filed an affidavit (with annexures) in Court on 24th March 2009.

In cross examination D-2 stated that from 1970 to 2008 he was the chairman of Kumi Co-operative and during that time the co-operative bought 2 trucks. The first truck was bought and paid for by the co-operative and the 2nd truck was the one in issue was bought in 2006.

D-2 further stated in cross examination that the problem with the Co-operative was that the people opted for mini bus and the Co-operative had difficulty financing the truck.

D-2 further stated in cross examination:

- "That the co-operative members used carrier and the mini bus.

- He was guided by the co-operative by-laws.

- Chairman is guided by the rules.

- His role was to chair.

- Board sits every month and the members meet annually.

- The duty of the Secretary is to keep minutes of the meetings.

- May 2006 meeting was held in the village.

- All committee members were present.

- The co-operative has 83 members.

- 7 committee members.

- He had the powers to terminate those members who did not turn up.

- That the powers were derived from the AGM. Those who did not participate were to be terminated.

- All the records were with the Secretary.

- 2nd Meeting was held in May but he could not recall.

- He only knew that one Mitieli was interested in buying the carrier and is the current Treasurer.

- On the 2nd last day Mitieli refused to buy the vehicle.

- Then they agreed to sell outside.

- They did not hold a special general meeting but a committee meeting.

- The person who is paying for the vehicle is paying under the co-operatives name. The vehicle was not sold.

- We just signed that he is starting the payment.

- by entering the sale and purchase we were not transferring the vehicle.

- We have not sold the vehicle.

- We will talk about the transfer when he finishes payments for the vehicle.

- I do not know that the sale and purchase states that the vehicle will be transferred.

- The agreement was read over and explained to me before I signed.

- The agreement was that the co-operative was to pay the 1st Defendant back. He will then return the vehicle. The agreement was with FDB.

- I had powers to preside on general meetings.

- The issue of the vehicle was discussed in all meetings.

- I did not have powers to sell the property of the co-operative.

- I have not sold the vehicle.

- The 1st defendant is only paying for the vehicle."

In re-examination, D-2 stated that:

- "He stood by his affidavit.

- The agreement was made and executed by a lawyer.

- I was happy with the sale and purchase agreement and I signed."

The court gave the parties 7 days to file written submissions. The parties filed written submission.

The Co-operatives Act 1996

The Co-operatives Act, 1996 provides for the registration and regulation of co-operatives, the repeal of the Co-operatives Societies Act (Cap 250) and other related matters.

The relevant part of the Act and notable sections include Section 4 (1) of the Act which provides for the objectives of a Co-operative and it provides that "a co-operative aims at promoting the economic and social interests of its members by providing effective services which the members need and can make use of.

(2) The main purpose of a co-operative is not maximisation of profits but service to members and a co-operative shall operate according to sound business principles."

Section 5 provides for the co-operatives principles and it states that "a co-operative shall in its operations observe the principles that-

(a) membership is voluntary and open to every person who meets the requirements for membership as laid down in this Act and the co-operative's bylaws: Provided that the co-operative has the economic capacity to accept new members;

(b) in primary co-operatives, every member has one vote irrespective of the number of shares held by him or her and in co-operatives other than primary co-operatives voting rights shall be as stipulated in their by-laws;

(c) dividend on share capital is limited;

(d) the surplus or the economic results arising out of the operations of a cooperative belong to the members of that co-operative and should be distributed in such a manner as would avoid one member gaining at the expense of others;

(e) education and training facilities are offered in co-operatives with a view to increasing and improving skills and to inform members of their rights and responsibilities within the co-operatives; and

(f) co-operatives work together with other co-operatives."

Another important provision is Section 14 of the Act which deals with the effect of registration, which provides that "the registration of a co-operative shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold movable and immovable property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its bylaws."

Section 17 deals with the power to make by-laws. Section 17 (1) provides that "a co-operative may, consistent with this Act, make any by-laws that are necessary or desirable for the purposes for which a co-operative is established.

(2) The by-laws of every co-operative shall include provisions in respect of matters mentioned in the First Schedule of this Act."

Section 18 (1) states that "the by-laws of a co-operative shall, when registered, bind the co-operative and its members to the same extent as if they were signed by each member and contained covenants on the part of each member for himself or herself for his or her successor to observe all the provisions of the by-laws."

The amendment and registration of by-laws is dealt with by Section 19. -(1) which provides that "a co-operative may amend its by-laws, including a change of name by a special resolution of the members passed at a general meeting convened for that purpose by at least two-thirds of the members present and voting according to the procedure laid down in the co-operative's by-laws."

The Co-operative Act deals with a number of other pertinent provisions and while the Court is not able to cite all those in this judgment it however wishes to draw the attention of the litigants to the Co-operative Act 1996 in its entirety.

THE BY-LAWS OF KUMI CO-OPERATIVE LIMITED

The Court has on file a copy of the by-laws of Kumi Co-operative limited. It is certified as true copy by the Registrar of Co-operative Societies and dated 12th June 2001.

The By-laws of Kumi Co-operative mainly follows the guidelines laid down in the Co-operatives Act 1996.

THE AFFIDAVITS AND THE MINUTES OF KUMI CO-OPERATIVE MEETINGS

The Former Chairman of the Plaintiff Co-operative, the 2nd Defendant in this matter swore an affidavit dated 19th March 2009, which was filed in Court on 24th March 2009. In this affidavit, the deponent annexed a number of minutes of the Board of the Kumi Co-operative and Minutes of the 2007 Annual General Meeting of the Kumi Co-operative.

6 Minutes are of the Board Meetings of the Kumi Co-operative held in May 2006, these are annexed in the said affidavit of the Former Chairman of the Plaintiff Co-operative, the 2nd Defendant.

The current Chairman of Kumi Co-operative (Plaintiff) in an affidavit sworn on 27th April 2009 and filed in Court on the same date points out that the dates of the meeting is not recorded. The Court makes a similar observation. The same is for the records of the AGM.

The Court for its benefit has had the records of the meeting translated from Fijian to English by the Acting Court Officer. The Court notes that the minutes marked "A" record that FDB sent a letter regarding outstanding payment of $6000.00. The second minutes marked "B" record that the Chairman stated in the meeting that people from FDB came to seize the vehicle. The meeting records marked "C" state that the Kumi Co-operative can have the vehicle released if they pay $2000.00 with 18 days. It also records some arrangement with one, Drugu, to assist the Kumi Co-operative in financing the Vehicle. Later the minute record that finances to pay FDB could not be arranged and the meeting agrees that Ralulu (the 1st Defendant) pay for the release of the vehicle.

The Annual General Meeting records discussions about the vehicle where the Chairman stated that the vehicle is with the 1st Defendant and that he has been making payments.

One observation the Court makes here is that the Current Chairman of the Kumi Co-operative was present in the Annual General Meeting. The Court further notes that the Chairman of Kumi Co-operative does not in his affidavit dated 27th April 2009, challenge or deny paragraph 25 of the affidavit of Sitiveni Tokalausa, the previous Chairman, wherein is annexed the true copy of the 2007 AGM minutes and annexed as "D".

An Affidavit was filed for the Defendants by Ravuama Vakatuturagania, dated 4th May 2009. The said deponent as at the date of the hearing remains the Secretary of the Kumi Co-operative. The Court here notes that despite being the Secretary of Kumi Co-operative, the Plaintiff, Ravuama Vakatuturagania, has filed an affidavit answering to the response of the Plaintiffs Affidavit.

Ravuama Vakatuturagania’s affidavit support the affidavit deposed by the Second Defendant. The affairs of the Co-operative are managed by its office bearers. In this case an existing office bearer verifies the past actions and gives the reasons that made the Co-operative take such actions. One of the issues is if he acted outside his powers. The simple answer, is no. The Secretary justifies the actions and has filed an affidavit for the Defendants against his own Co-operative stating what transpired. He still continues to act in his position. No disciplinary action has been taken against him. Despite the current Chairman stating in Court that they will soon deal with him. The Court believes that while the 2nd Defendant has backed his actions with minutes filed in Court of the Kumi Co-operative and supported by his Secretary then, who remains the existing Secretary.

The Plaintiff does not support his action, to commence action against the 1st Defendant and the 2nd Defendant by any Minutes of the Co-operative. In fact the Secretary of Kumi Co-operative states in his affidavit that the Plaintiff (Meaning the Chairman) is trying [to] und[o] (my corrections) what was approved by the Board of Kumi Co-operative Ltd single handed and does not have the support of the majority of the members. These are major concerns of this Court. The Chairman of the Plaintiff Co-operative does not get support from his own official. The Court is not satisfied with the Action filed as it does not seem to get support from its own office bearers. The question that is raised is whether the Chairman has the mandate to institute action. He has not supported that by evidence or affidavits of other members or office bearers of the Co-operative.

THE SALE AND PURCHASE AGREEMENT

On 26th May 2006 a License carrier Sales & Purchase Agreement was entered into between Kumi Co-operative Ltd and Vilitati Ralulu. The said agreement was prepared and witnessed by a Solicitor.

The court notes that this agreement was entered into between the Plaintiff and the 1st Defendant. The agreement identified the Kumi Co-operative as the "vendor". The "purchaser" is not explicitly identified in the agreement. However, the Court notes that the other party to the agreement is Vilitati Ralulu and would therefore be the "purchaser". Apart from this omission. There are some typographical errors, drafting errors and repetitions which the court notes in the agreement. For instance, the repetition of clause 2 and drafting error in clause 6, where in place of the word "Purchaser" the court is of the view should have been "Vendor" and vice versa.

The typographical errors, drafting errors and the repetitions do not in the Courts view invalidate the agreement. The agreement entered into between the parties is a contractual document.

Some of the clauses of the agreement which the Court considers important are:

Clause 3 – "That if the Purchaser fails to pay the said sums the Vendor shall seize the said vehicle"

Clause 4 – "That the Vendor agrees to sign all the necessary application and surrender all forms in favour of the Transfer of the licenses carrier Registration No. LC19 to the Purchaser for the security until the Purchaser complete the payments to the Fiji Development."

Clause 7 – "That the said vehicle to be operated under the License Carrier Permit shall be always in the possession of the Purchaser."

Clause 9 – "That the Vendor shall not claim any interest in the License Carrier LC-19 or vehicle used under the said permit no. LC-19"

Clause 13 – "That the Purchaser shall maintain and keep all the vehicle used under the said license Carrier Permit in road worthy condition at all times at his costs to the satisfaction of the Road Transport Department and all other authorities concerned."

The Plaintiff in this action has not argued that the 1st Defendant has breached one of the clauses of the agreement for the Parties to terminate the agreement.

CAPACITY TO ENTER INTO CONTRACT

Section 14 of the Co-operatives Act provides that "the registration of a co-operative shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold movable and immovable property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its bylaws."

The Court notes that Kumi Co-operative is a Registered Co-operative with perpetual succession, a common seal, power to hold movable and immovable property and to enter into contracts, to institute and defend suits and other legal proceedings.

THE STATUS OF THE AGREEMENT AND THE DISPUTE BETWEEN THE PARTIES

The Kumi Coperative Ltd would have firstly entered into an agreement with FDB to seek a loan to purchase the vehicle (the vehicle in dispute). The FDB as a security would have taken a bill of sale over the vehicle. Later the previous Chairman and the Secretary (who according to the evidence is still the Secretary) on behalf of the Kumi Co-operative Ltd entered into an agreement with the 1st Defendant to pay for the 1st Defendant to pay FDB a sum of $250.00 per week for the vehicle which was under a bill of sale.

The Previous Chairman who was the Chairman when the said agreement took place gave evidence and agreed that they entered into the said agreement following some meetings of the Co-operative Committee. He also stated that it was not personal but for the Kumi Co-operative.

The Court notes that Kumi Co-operative is a registered co-operative, which gives it perpetual succession and a right to common seal, and with power to hold movable and immovable property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its bylaws as outlined by Section 14 of the Co-operatives Act, 1996.

Relying on its status as a registered co-operative the Kumi Co-operative entered into the contract with FDB to seek a loan to fund the purchase of the truck (power to hold movable and immovable property). The Court also notes that later relying on its power to enter into a contract it entered into an agreement with the 1st Defendant to pay for the truck as per the terms of the agreement dated 26th May 2006.

The Court finds that the Kumi Co-operative has powers to enter into a contract due to its registration as a Co-operative. The previous Chairman, who is also the 2nd Defendant, told the Court that due to financial difficulties the Co-operative had to seek a person to take over the loan. Firstly, they sought within the membership of Kumi Co-operative. When as per his evidence they were ‘betrayed’ in the last minute by one member they resorted to finding someone outside the co-operative. They got the 1st Defendant who agreed to take over the loan. The Co-operative laws do not bar the Co-operative from any commercial dealing with non-members. According to the 2nd Defendant they dealt in "good faith" with the intention of saving the co-operatives name and what to the court would seem to be is to show to the financial institutions its ability to finance its loan. Even though it is paid for by someone other than the co-operative in its name.

The agreement entered into by the office bearers of the Co-operative following resolution in its meeting is lawful and binding on the Co-operative and its future office bearers.
Perpetual succession means that the co-operative cannot suffer a lack of capacity as in the case of an infant or an individual suffering from mental illness. Nor does the co-operative exist for a specified period of time. A co-operative does not die but continues to exist until it’s dissolved or liquidated (Sections 108 and 109 of the Co-operatives Act). Its members may come and go but this does not affect the legal personality of the co-operative.

Perpetual succession does not allow successive office bearers the right to disown or reverse a legitimate decision of the previous office bearers, no matter how much they dislike the decision taken. The current office bearers cannot disown a legally binding agreement entered into by its predecessors. The current office bearers cannot undo the agreement of 26th May 2006. It is a legally binding agreement between the co-operative and the 1st Defendant. It however, does not mean that the co-operative could have by negotiating with the 1st Defendant for them to repay the 1st Defendant the monies that he has paid to FDB and have the truck returned to them. This can be a new agreement between the plaintiff and the 1st defendant to supersede the existing agreement. No such proposal or agreements have been made. Neither the Plaintiffs deny or dispute that the 1st Defendant has paid monies to FDB. The Court will not close its eyes to the fact that the 1st Defendant has paid considerable sum of money and carried out maintenance to the vehicle in dispute.

It has not been proved to the Court that the 2nd Defendant acted ultra vires of the Kumi Co-operative Ltd mandate. Furthermore, the Current Secretary, Ravuama Vakatuturagania (who with the 2nd Defendant signed the agreement for and on behalf of the Kumi Co-operative) of the Kumi Co-operative Ltd in his affidavit dated 4th May 2009 stated that the actions were taken to save the name of Kumi Co-operative Ltd and its actions were approved at the Annual General Meeting of the Kumi Co-operative Ltd.

The Court finds that the Kumi Co-operative has contractual capacity as a registered Co-operative as provided under Section 14 of the Co-operatives Act and that the agreement that was entered into between the parties was a lawful binding contract (agreement). The Chairman and the secretary of Kumi Co-operative acted for the Co-operative as its office bearers and acted in the best interest of the Co-operative and in good faith to ensure that the Co-operatives name was not tarnished and that it maintains its good standing within the financial institutions.

The Court also draws to the attention to the Parties of Section 24 of the Co-operatives Act, 1996 which states that "no act of a co-operative or any member of the Board or any officer of the co-operative shall be deemed to be invalid by reason only of the existence of any defect in the by-laws of the co-operative or of the Board or in the appointment or election of an officer or on the ground that an officer was disqualified for his or her appointment."

THE DISPUTE AS TO THE MANAGEMENT OF KUMI CO-OPERATIVE LIMITED

The evidence of the witnesses and the affidavits filed in this action shows that there are some disputes as to the management of the Kumi Co-operative. Section 115 of the Co-operatives Act, 1996, governs settlement of disputes and it provides that

"(1) If a dispute concerning the by-laws, election of officers, and conduct of meetings, management or business of a co-operative arises-

(a) among members, past members and persons claiming through members, past members and deceased members;

(b) between a member, past member or persons claiming through a deceased member, and the co-operative, its Board or any other officer of the co-operative;

(c) between the co-operative or its Board and any other officer of the co-operative;

(d) between the co-operative and any other co-operative,

such dispute may be referred, after due attempts to settle the issue by local informal mediators, to the Registrar or directly to the Co-operative Tribunal constituted under Section 116 of this Act for decision.

(2) Without prejudice to the generality of subsection (1) of this Section-

(a) a claim by a co-operative for a debt or demand due to it from a member, past member or the nominee or legal representative of a deceased member, whether such debt or demand is admitted or not; and

(b) a claim by a member who was a guarantor of a loan against the member whose loan he or she guaranteed resulting from the repayment by the guarantor of the loan to the co-operative, for the repayment of the amount by the borrower, shall be deemed to be disputes concerning the business of the co-operative within the meaning of subsection (1) of this Section.

(3) The Registrar shall, on receipt of a reference under subsection (1) of this Section have regard to the nature and complexity of the dispute, and decide whether-

(a) to settle the dispute himself or herself; or

(b) to refer the dispute to the Co-operative Tribunal.

(4) Where the Registrar decides to settle the dispute himself or herself and gives a ruling thereon which aggrieves a party to the dispute, that party may, within 30 days of the date of the Registrar's ruling, appeal to the Co-operative Tribunal and the Co-operative Tribunal shall make a decision within two months of receiving the appeal and that decision shall be final and conclusive.

(5) Where the Registrar decides to refer the dispute to the Co-operative Tribunal according to the provision of subsection (3) of this Section, the Co-operative Tribunal shall deliberate on the case and make a decision within two months and that decision shall be final and conclusive.

(6) Where the parties to a dispute refer a case to the Co-operative Tribunal directly according to the provisions of subsection (1) of this Section the Co-operative Tribunal shall deliberate on the case and make a decision within two months and that decision shall be final and conclusive."

This section is drawn to the attention of the Parties and it is envisaged that the Parties will take heed of the Courts note and should the dispute remain as to the by-laws, election of officers, conduct of meetings, and management or business of a co-operative that the parties will explore the options under the Co-operative Act, 1996.

THE ORDERS

For the reasons given the Court dismisses the Plaintiff Action.

Chaitanya Lakshman
RESIDENT MAGISTRATE

26/08/09