https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/299

**** **REPUBLIC OF KENYA** **IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI** **TRIBUNAL CASE NO. E985 OF 2025** **(Hon. J. Mwatsama- Chairperson, Hon. B. Sawe- Member, Hon. F. Lotuiya- Member, Hon. P. Aol- Member, Hon. M. Chesikaw-Member)** **ASBJORN FORLAND NGANI…..………….………………….…CLAIMANT** **VERSUS** **KUSCCO HOUSING COOPERATIVE** **SOCIETY LIMITED……………………………………..……….RESPONDENT** **RULING OF THE TRIBUNAL** 1. The matter before us for determination is a Notice of Preliminary Objection by the Respondent dated **9th December, 2025.** **NOTICE OF PRELIMINARY OBJECTION** 1. The Respondent’s preliminary objection is based on the following grounds: 2. That by virtue of Clause 79 of the KUSCCO Housing Cooperative Society Limited by-laws, this Honourable Court does not have the jurisdiction to entertain the current application and suit at the first instance as the same ought to be first ventilated through Alternative Dispute Resolution Mechanisms and/or Arbitration. 3. The application is incurably defective, misconceived, incompetent and bad in law. 4. The parties were directed to canvass the Preliminary Objection by way of written submissions. The Respondent filed written submissions dated 27th April, 2026, while the Claimant filed written submissions dated 28th April, 2026. **RESPONDENT’S SUBMISSIONS:** 1. The Respondent submits that its submissions demonstrate that by virtue of clause 79 of the KHC by-laws, the Honorable Tribunal does not have the Jurisdiction to entertain the current suit at the first instance as the same ought to be first ventilated through the mechanisms set out in in clause 79 of the KHC by-laws; and that the Preliminary Objection raises a pure point of law and therefore sustainable to have the suit be struck out with costs. **Whether this Honorable Tribunal has Jurisdiction to entertain the current suit in light of unexplored alternative dispute resolution avenues provided in the by-laws governing the relationship of the Respondent and its members** 1. The Respondent submits that contrary to the doctrine of exhaustion of internal and statutory remedies, the Claimant approaches this Tribunal having not exhausted alternative avenues provided in the by-laws of the Society and as such binding to its members; that as per By-Law 79 of KHC, the Tribunal has no jurisdiction to handle the claim as the first port of call in the event of a dispute between the KHC and its members. 2. The Respondent cites the provision as follows: ***“If any dispute concerning the business of their Co-operative Society arises: -*** 1. ***Among members, past members and persons claiming through members, past members and deceased members or,*** 2. ***Between members, past members or deceased members, and the society, its committee or any officer of the society; or*** 3. ***Between the society and any other Co-operative Society; which cannot be determined by the Board, General Meeting, the same shall be referred to alternative dispute resolution or arbitrators. In the event that the issue is not determined then it shall be referred to the Co-operative Tribunal. Appeal from aggrieved party shall be referred to the High Court...”*** 4. It is the Respondent’s submission that a clear reading of By-law 79 required the Claimant herein to ventilate his grievances first with the Board or in the General Meeting and if the two avenues prove inoperable or futile, he could then have the matter referred to Alternative Dispute Resolution or Arbitration; that the Claimant leapfrogging his grievances to this Tribunal deeply offends not only the established By-laws within which the Society operates but also undermines the doctrine of exhaustion of internal remedies; that Jurisdiction is everything and accordingly this Tribunal is not properly seized of the current suit. 5. It is the Respondent’s submission that the Respondent’s position find support in the longstanding judicial decisions in Kenya. The Respondent cites the case of **Speaker of National Assembly vs. Karume [1992] KLR 21** the Court stated the following often repeated words: ***“... where there is a clear procedure for redress of any particular grievances prescribed by the constitution as an Act of Parliament, that procedure should be strictly followed. Accordingly, the specific procedure provided by any laws must be strictly adhered to since there are good reasons for such special procedures.”*** 1. The Respondent submits further that the strict adherence to the established procedures before invoking the jurisdiction of the Court was further affirmed in **Geoffrey Mutisya Kabiru And 2 Others vs. Samuel Muya Henry And 1756 Others [2015] EKLR** where the Court of Appeal stated: ***“It is imperative that where a dispute resolution mechanism exists outside courts the same be exhausted before the jurisdiction of the courts is involved.* Courts ought to be fora of last resort and not the first point of call the moment the storm brews... The exhaustion doctrine is a sound one and serves the purpose of ensuring that there is a postponement of judicial consideration of matters to ensure that a party is first of all diligent in the protection of his own interest within the mechanism in place for resolution outside the courts.”** 1. The Respondent also states that the Court in **Macaria v Kenya Power and Lighting Company [2024] eKLR** upheld the Respondent’s Preliminary Objection since the Petitioner filed a Petition in Court before exploring the established dispute resolution machinery provided for in the governing Act. In the same way, submits the Respondent, the current suit by the Claimant bypasses the dispute resolution machinery undermining By-Law 79 of the Respondent. 1. The Respondent urges the Tribunal to take cognizance of the binding nature and effect of such By-Laws; that **Rule 7 (p)** of the **Co-operative Societies Rules, 2004** mandate a society established under the Act to make laws on settlement of disputes and argues that it is on this basis that the By-laws of the Respondent and that it is therefore unprocedural for a member to escalate issues to this Tribunal without following the laid down procedure on internal dispute resolution mechanisms. 2. The Respondent further submits that no attempt was made by the Claimant to seek redress for his grievances within the internal structures of the society; that there are no reasons for the Claimant to assume that the internal remedies would be inadequate or futile in addressing his grievances **(*See Krystalline Salt Limited -vs- Kenya Revenue Authority [2019] eKLR*);** that no exceptional and or strenuous circumstances prevented or barred the Claimant from following the right channels of resolution as the internal structures remain intact and adequate. **Whether the Preliminary Objection raises a pure point of law and therefore sustainable enough to have the suit struck out with costs** 1. It is the Respondent’s submission that the Notice of Preliminary Objection herein is based on uncontested facts and a pure-crisp point of law being the question of Jurisdiction. This Tribunal’s jurisdiction has not been properly invoked; that in the locus classicus case of **Mukisa Biscuit Manufacturing Co Ltd -vs. - West End Distributors (1969) EA 696** the Court elaborated the nature, scope and effect of preliminary objection. The Court underscored: ***“A Preliminary Objection consists of a point of law which has been pleaded or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court or a plea of limitation or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration.....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”.*** 1. According to the Respondentit follows therefore that the current objection by the Respondent augurs well with Mukisa’s delineation of a proper preliminary objection; that **Firstly**, the Jurisdiction of this Tribunal has been improperly invoked despite the Claimant being bound by the dictates of By-law 79 which governs how disputes should be disposed in the first instance; that **Secondly**, membership of the Claimant to the society is not a contested fact. 2. It is the Respondent’s submission that the suit being a claim of breach of contract surely the same can be disposed by the available internal dispute resolution machinery; that the Claim has thus been filed in this Tribunal prematurely; that the Respondent’s preliminary objection is therefore of a narrow scope and does not raise any substantive motion or issues capable of determination after perusal of evidence. The Respondent makes reference to ***Dismas Wambola v Cabinet Secretary, Treasury & 5 others (2017) Eklr*** 3. In conclusion, the Respondent praysthat the Notice of Preliminary Objection dated 9th December 2025 be sustained by this Honourable Tribunal and the Statement of Claim dated 20th November 2025 be struck out in *toto*; and costs be awarded to the Respondent. **CLAIMANT’S SUBMISSIONS:** 1. The Claimant submits in opposition to the Preliminary Objection thatPrior issues for determination in Preliminary Objection is settled. 2. The Claimant also submits that In ***Mukisa Biscuits Manufacturing Co Ltd Vs West End Distributors Ltd* Civil Appeal No.9 of 1969 (1969) EA 696 Law JA** was of the following view: - ***“A preliminary objection consists of a point of law which has been pleaded, or which arises from clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit. Example are on objection to jurisdiction of the Court, or plea of limitation or a submission that the parties are boned of contract giving rise to the suit to refer the dispute to arbitration.”*** **What determines Court or Tribunal jurisdiction.** 1. The Claimant submits that jurisdictionis the power vested in courts or Tribunal by law to adjudicate upon to determine and dispose of a matter, derived from the constitution, by statute law and by principle laid by judicial precedent. **The Jurisdiction of the Co-operative Tribunal** 1. The Claimant submits thatthe Tribunal is established under *Section 77 of Co-operative Societies Act (Cap 490) Law of Kenya* and holds exclusive, unlimited and pecuniary jurisdiction over disputes; that Section 76 of the Co-operative Societies Act states that disputes under the act **SHALL** be referred to the Tribunal, it states: **1. *“If any dispute concerning the business of co-operative society arises: -*** ***a. Among members, past members and persons claiming through members, past members and deceased members, or*** ***b. Between members, past members or deceased members, and the society, its committee or any officer of society, or*** ***c. Between the society and any other cooperative society it shall be referred to the Tribunal”*** 1. It is the submission of the Claimant thatthe Preliminary objection is not premised on law or statute but on the Respondent’s By-law; that the By-laws cannot override a substantive law and the same is frivolous. 2. The Claimant states that the issue of Tribunal Jurisdiction in similar cases has been firmed and the same is derived from the statute; that in ***Nicholas Macharia Maina Vs Fridah Muguonga Kagendo*, Justice Nyaga while quoting *Robert Githigani Njagi Vs John Mutual Menda (2020) eKLR*** states: ***“It is therefore evident that the dispute herein involves Sacco loan and in my view falls within the business of the society and therefore falls within the ambit of Section 76 of the Sacco Act.*** ***The applicant invoked Section 76 and 77 of the Co-operative Societies Sacco on settlement of disputes:”*** 1. The objection is an abuse of Court process and ought to be dismissed with costs. **ANALYSIS AND DETERMINATION** 1. We have considered the Notice of Preliminary Objection, the statement of claim and the written submissions of both parties. We have also considered the applicable case law and the circumstances of the case. The issues that arise for our determination are as follows: 2. Whether the Respondent’s Notice of Preliminary Objection meets the threshold for preliminary objections. 3. Whether or not the Preliminary Objection is merited. **Whether the threshold for a Preliminary Objection has been met.** 1. What constitutes a preliminary objection was set out in **Mukisa Biscuit Manufacturing Co. Ltd Vs. West End Distributors Ltd (1969) EA 696** and later emphasized by the Supreme Court in the **Hassan Ali Joho & another v Suleiman Said Shahbal & 2 others (2014) eKLR** as follows: ***“(31)To restate the relevant principle from the precedent-setting case, Mukisa Biscuit Manufacturing Co Ltd –vs. - West End Distributors (1969) EA 696: “a preliminary objection consists of a point of law which has been pleaded or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the court or a plea of limitation or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration….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”.*** 2. In **Dismas Wambola v Cabinet Secretary, Treasury & 5 others (2017) eKLR**, stated as follows: **“*A preliminary objection must first, raise a point of law based on ascertained facts and not on evidence. Secondly, if the objection is sustained, that should dispose of the matter. A preliminary objection is in the nature of a legal objection not based on the merits or facts of the case, but must be on pure points of law. It may be noted that preliminary objections are narrow in scope and cannot raise substantive issues raised in the pleadings that may have to be determined by the court after perusal of evidence….”*** 3. The case of **Oraro vs. Mbaja [2005] 1 KLR** offers significant insight where the Court observed that: ***“A preliminary objection consists of a point of law which has been pleaded or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit …Anything that purports to be a preliminary objection must not deal with disputed facts, and it must not itself derive its foundation from factual information which stands to be tested by normal rules of evidence…….”*** 4. In determining whether the threshold has been met, we must address the question of whether or not the preliminary objection raises a pure point of law. **Whether the Respondent’s Preliminary Objection raises pure points of law:** 1. As held in the Mukisa Biscuit case, the Respondent’s Preliminary Objection is an example of a case where the parties were expected by contractual terms to refer the case to arbitration at the first instance. 2. The Respondent has argued that the Tribunal lacks jurisdiction over the Claimant’s case at the first instance as the same was supposed to first be referred to Arbitration before being brought to the Tribunal. 3. We note that By-Law 79 of the Respondent’s By-laws is couched in mandatory terms. In the instant preliminary objection, the Claimant, is accused of moving the Tribunal before exhausting the mandatory Alternative Dispute Resolution process as required by By-law 79 of the Respondent. 4. It is our finding that the objection herein is of a nature that if argued, may dispose of the Claim. The Preliminary Objection herein therefore raises a pure point of law **Whether or not the Preliminary Objection has merit.** 1. Section 5 of the Civil Procedure Act provides that ***“any court shall, subject to the provisions herein contained, have jurisdiction to try all suits of a civil nature excepting suits of which its cognizance is either expressly or impliedly barred. The operative words in this provision are “expressly” or “impliedly barred.”*** 2. The Cooperative Societies Act, Cap 490 of the Laws of Kenya mandates the Tribunal to hear and determine disputes between societies and its members or past members. Section 76 (1) of the Cooperative Societies Act provides that if any dispute concerning the business of a co-operative society arises: — 1. among members, past members and persons claiming through members, past members and deceased members; or 2. between members, past members or deceased members, and the society, its committee or any officer of the society; or 3. between the society and any other co-operative Society; it shall be referred to the Tribunal. 4. However, the Respondent through its By-Laws as mandated by Rule 7 (p)of the Cooperative Societies Rules, 2004, has provided an internal dispute resolution process that culminates in Arbitration. By-Law 79 of the Respondent provides as follows: ***“If any dispute concerning the business of the Co-operative Society arises: -*** ***a. Among members, past members and persons claiming through members, past members and deceased members or,*** **b. Between members, past members or deceased members, and the society, its committee or any officer of the society; or** ***c. Between the society and any other Co-operative Society;* which cannot be determined by the Board, General Meeting, the same shall be referred to alternative dispute resolution or arbitrator. In the event that the issue is not determined then it shall be referred to the Co-operative Tribunal. Appeal from aggrieved party shall be referred to the High Court.”** 1. It is the Respondent’s contention that the Claimant has not exhausted the laid mechanism, hence the Tribunal has no Jurisdiction to hear and determine the claim herein. 2. Our understanding of By-Law 79 of the Respondent’s By-Laws is that the Respondent’s Dispute Resolution process has three stages. The first stage after a dispute arises, is before the Board, the second stage is at the General Meeting and the final stage is alternative dispute resolution or arbitrator. The By-law is clear that the dispute progresses from the first to the alternative resolution or Arbitration stage if it cannot be solved by the first two stages. 1. It is trite that he who asserts must prove. It is not in question that the ownership and control of the three internal processes set out under By-Law 79 is vested in the Respondent. Especially, a member who has withdrawn from a SACCO and is in pursuit of refund of savings is incapable of placing a dispute before the Board, or convening a General Meeting where his dispute can be discussed. The position of such a past member against the position of the SACCO is not in dispute. The member is at a position of disadvantage and would depend on the goodwill and professionalism of the SACCO in order to access such mechanisms as provided under By-Law 79 of the Respondent’s By-Laws. 2. In the circumstances we find that the onus fell upon the Respondent to demonstrate that the Claimant was invited to have his dispute taken through the internal mechanisms after the expiry of the withdrawal period and default of payment, but the Claimant either, failed or refused to participate. 3. It is the conclusion of this Tribunal that the Claimant is before us because the internal dispute resolution process was not opened up to him by the Respondent. 4. Consequently, we find that the Notice of Preliminary Objection dated 9th December, 2025 lacks merit and the same is hereby dismissed with costs. Mention for pre-trial directions on **15/10/2026** before the ADR. Ruling dated and delivered *virtually* at **Nairobi** this **23rd** day of **July, 2026.** **Hon. J. Mwatsama Chairperson Signed 23/7/2026** **Hon. B. Sawe Member Signed 23/7/2026** **Hon. Fridah Lotuiya Member Signed 23/7/2026** **Hon. M. Chesikaw Member Signed 23/7/2026** **Hon. P. Aol Member Signed 23/7/2026** Court Assistant – J. Koki Oluoch advocate holding brief for Mr. Ngani advocate for the Claimant Okore Jayalo advocate for the Respondent. **Hon. J. Mwatsama Chairperson Signed 23/7/2026**