https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/295

Keny a Union of Savings and Credit Co-operatives Ltd v Odera (Tribunal Case E949 of 2025) [2026] KECOPT 295 (KLR) (16 July 2026) (Ruling) Neutral citation: [2026] KECOPT 295 (KLR) Republic of Kenya In the Cooperative Tribunal Tribunal Case E949 of 2025 J Mwatsama, Chair, B Sawe, F Lotuiya, M Chesikaw & PO Aol, Members July 16, 2026 Between Keny a Union of Savings and Credit Co-operatives Ltd Claimant and Julius Odera Respondent Ruling 1.The Notice of Preliminary Objection dated 27th February, 2026 was brought under Rule 3 & 6 of the Co-operative Tribunal Rules and the Inherent Jurisdiction of the Tribunal seeking among others that the entire Claim be Struck Out with costs on the grounds that:1.The Plaintiff has failed to comply with the mandatory audit and surcharge procedures established under Sections 58, 59, 60, and 73 of the Co-operative Societies Act, rendering the suit premature and legally untenable and fatally defective.2.The Tribunal lacks the mandate to entertain a claim for losses in a Cooperative society that have not been reviewed and/or cleared by the Commissioner’s Statutory Audit unless through an appeal against the Commissioner’s specific findings under Section 58, 59, 60 and 73 of the Act.3.The suit is premised on a "customized," unsigned, and undated private report that contradicts the Statutory Inquiry Report issued by the Commissioner for Co-operative Development under Section 58 and 59 of the Co-operative Societies Act.4.A claim for Kshs. 1,695,500,000 cannot be sustained where the Plaintiff has deliberately suppressed the Regulator's Audit findings in favor of an unauthenticated, questionable private document.5.The law requires that any loss to be processed through Section 58 and 73 of the Cooperative Societies Act6.The Plaintiff previously instituted a similar claim against the Defendant in the High Court of Kenya at Nairobi, Civil Case E077 of 2025, which was dismissed. The current suit is a blatant attempt at forum shopping, seeking to re-litigate a failed claim in a different forum.7.The suit is not brought for the bona fide vindication of a right but is a vexatious attempt to harass the Defendant using "customized" evidence that was not subjected to the scrutiny of the Commissioner for Co-operative Development High Court.This Tribunal then gave directions for the Notice of Motion to be served and be canvassed by way of Written Submissions. Written Submissions 2.The Respondent filed his written submissions dated 9th March, 2026 stating among others:i.That there is no report or inquiry by the Commissioner for Co-operative Development or an Authorization under his writing under Section 59 for an inquiry to be conducted by an Independent Auditor in total violation of section 58 and 59 of the Co-operative Societies Act (Cap 490).ii.That a Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law and cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. That the Commissioner for Cooperative Development is mandated at this instance as the first port of call to make and inquiry and surcharge any losses. That the Claimant has bypassed the Commissioner’s inquiry and the surcharge mechanism provided under the law and without a Surcharge Order from the Commissioner, there is no "debt" or "loss" legally crystallized for the Tribunal to enforce. That the Tribunal lacks the mandate to entertain a claim for losses in a Cooperative society that have not been reviewed and/or cleared by the Commissioner’s Statutory Audit unless through an appeal against the Commissioner’s specific findings under Section 58, 59, 60 and 73 of the Act. 3.The Claimant filed his Written Submissions dated 28th March, 2026 stating among others:i.That a close examination of the Notice of Preliminary Objection filed demonstrates that the objection is heavily grounded on contested factual matters of the substantive suit including, whether there exists a valid forensic audit report, whether the report is authenticated or “customized”, whether losses were incurred and attributable to the Respondent, whether the Claimant suppressed any statutory report, whether the Claim is brought in bad faith.ii.That the issues above are expressly disputed in the pleadings and defence and can only be resolved through evidentiary processes including production of documents and cross-examination.iii.The Respondent’s objection improperly invites the Honourable Tribunal to interrogate evidence at a preliminary stage, which is contrary to established principles. Consequently, the Preliminary Objection fails the Mukisa Biscuit test and is incompetent.iv.The scope of what constitutes “the business of a co-operative society” has been judicially interpreted broadly to include not only the internal management of the society but also all matters relating to its financial affairs, governance, and operations.v.That the dispute arises from the conduct of the Respondent, who served as an officer of the Claimant society, and involves allegations of financial loss, mismanagement of funds, breach of fiduciary duty, and negligence.vi.That the dispute clearly falls within the ambit of Section 76(1)(b) of the Act as a dispute between a co-operative society and its officer and further qualifies under Section 76(2)(a) as a claim by the society for a debt or demand due to it. That the issues raised directly concern the business and financial affairs of the society and are therefore properly within the jurisdiction of this Honourable Tribunal.vii.That Section 58 does not contain any provision that makes such inquiry a mandatory condition precedent to the institution of proceedings before the Honourable Tribunal. It neither ousts nor limits the jurisdiction conferred upon the Tribunal under Section 76 of the Act, which provides for the determination of disputes concerning the business of a co-operative society.We have considered the Notice of Preliminary Objection and the Written Submissions filed, and the only question remaining for determination is as to whether the requirements of a valid preliminary objections have been met. 4.Has the requirements of a valid preliminary objections have been met?The decision in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, is the locus classicus on the law on preliminary objections in Kenya where with crystal clarity the Court pronounced itself that:“A preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of preliminary objections does nothing but unnecessarily increase costs and on occasion, confuse the issue, and this improper practice should stop.”The tests to determine whether a matter raises a true Preliminary Objection was summarized in the case of David Karobia Kiiru v Charles Nderitu Gitoi & Another [2008] eKLR as follows: -“For a Preliminary Objection to succeed the following tests ought to be satisfied: Firstly, it should raise a pure point of law; secondly, it is argued on the assumption that all the facts pleaded by the other side are correct; and finally, it cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. A valid Preliminary Objection should, if successful, dispose of the suit.”The High Court has faithfully upheld the principle in a constellation of decisions, including Oraro v Mbaja [2005] eKLR, where the Court emphasized:“It is to be recalled, however, that learned counsel for the Applicant did retreat into some fall-back position in which he presented his client's gravamen as a fundamental issue of proper conduct of litigation dependent on the Court's discretion exercised by virtue of Section 3A of the Civil Procedure Act (Cap. 21). The Court's discretion is never exercised just on the basis of propositions of law; there must be a factual situation of which the Court takes cognisance, and in relation to which its equitable conscience is exercised. If a matter comes before the Court dressed as a 'preliminary objection', it will not come to co-exist with such factual scenarios as may lead the Court to exercise its discretion by virtue of Section 3A of the Civil Procedure Act. More importantly, it has to be appreciated that the Court's discretion exercised by virtue of Section 3A aforesaid is always for the purpose of upholding the law and so far as possible; and this would require preserving the claims of parties so that they may be heard and determined according to law. By contrast, the Applicant's plea is that the Respondent's pleadings be terminated in limine. There is no consistency between such a prayer, which belongs to the normal practice attending preliminary objections (matters of law), on the one hand, and the case for ensuring fair trial which the Applicant has also urged, on the other hand.”Also, in Attorney General & Another v Andrew Mwaura Githinji & Another [2016] eKLR, the High Court was explicit on the scope, nature and meaning of a Preliminary Objection in the following terms: -i.A Preliminary Objection raises a pure point of law which is argued on the assumptions that all facts pleaded by other side are correct.ii.A Preliminary Objection cannot be raised if any fact held to be ascertained or if what is sought is the exercise of judicial discretion; andiii.The improper raise of points by way of preliminary objection does nothing but unnecessary increase of costs and on occasion confuse issues in dispute. 5.In this particular case, a few issues have been proffered as pure points of law, but the two main ones are;i.The Violation of Statutory Procedure, andii.The Ouster of Jurisdiction 6.We have considered the two issues and we are persuaded that this Tribunal is not the first point of call on issues raised by a forensic audit report relating to fraud, negligence, mismanagement or disputes relating to loss as a result of any of those (fraud, negligence or mismanagement). Numerous court cases define the first point of call-in dispute resolution as the first forum with legal authority to listen to witnesses, review evidence and make the first ruling.The forensic audit issues raised by the Claimant appear to this Tribunal as issues that fall within the ambit of Section 58 of the Cooperatives Societies Act that may first need to be handled by other forums as points of call before the same are tabled at the Tribunal. As such, we are persuaded that as a Tribunal we are still not yet seized with jurisdiction (our jurisdiction has still not crystallized) at this very moment to intervene and as such, we refuse the invitation to intervene at this moment. Final Orders 7.The Notice of Preliminary Objection dated 27th February, 2026 succeeds and the whole suit is struck off with no orders as to costs. RULING DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 16TH DAY OF JULY, 2026.HON. J. MWATSAMA CHAIRPERSON SIGNED 16/7/2026HON. B. SAWE MEMBER SIGNED 16/7/2026HON. FRIDAH LOTUIYA MEMBER SIGNED 16/7/2026HON. M. CHESIKAW MEMBER SIGNED 16/7/2026HON. P. AOL MEMBER SIGNED 16/7/2026Court Assistant – Mutai