https://new.kenyalaw.org/akn/ke/judgment/kecopt/2026/327

**REPUBLIC OF KENYA** **IN THE COOPERATIVE TRIBUNAL IN NAIROBI** **TRIBUNAL CASE NO E372 OF 2021** **(Coram: Hon. J. Mwatsama- Chairperson, Hon. B. Sawe- Member, Hon. F. Lotuiya- Member, Hon. M. Chesikaw- Member and Hon. P. Aol- Member.)** **CAROLINE WARUI ............................................................1ST CLAIMANT** **HENDRIK BRUYN .............................................................2ND CLAIMANT** **EUNICE MUTHONI NDIRANGU .......................................3RD CLAIMANT** **TIMOTHY MUTAMBUKI J. .................................................4TH CLAIMANT** **MWENDE MUTAMBUKI ....................................................5TH CLAIMANT** **LAWRENCE MWENDA MUCHAI .....................................6TH CLAIMANT** **MOSES OMONDI .............................................................7TH CLAIMANT** **TABITHA MUGECHI .........................................................8TH CLAIMANT** **-VERSUS-** **MOBIMATT INVESTMENT COOPERATIVE** **SOCIETY……………………………………………………1ST RESPONDENT** **DUNCAN OTIENO (CHAIRMAN) ................................2ND RESPONDENT** **ELKHANAH KOINGOINA (C.E.O) ..............................3RD RESPONDENT** **JUDGEMENT OF THE TRIBUNAL** 1. The Claim herein was brought by the Claimants against the Respondents vide a Statement of Claim dated 26th November, 2021, filed on 6th December, 2021. 2. The Claimants aver in the statement of claim they were at all material times members of the 1st Respondent while the 2nd and 3rd Respondents were on the Board of Management, for the Respondent; that by contracts made in writing on or about 2017, the claimants individually entered into an agreement with the respondents to purchase hostel room, totalling to fourteen (14) student hostel developments, located at Chuka, Meru, for the purpose of housing students studying at Chuka University; that they were to earn a monthly rental return per unit of Kshs. 16,000/= which was net of Kshs. 4,000/= (the costs for running the hostel unit (insurance, repairs and other pertinent costs of renting the units payable to a Management Company to be operated and managed by the respondents). 3. The Claimants state the particulars of their investments as follows:- | | | | | | --- | --- | --- | --- | | **No.** | **Name of Claimant** | **No. of Units Purchased** | **Total Cost (Kshs.)** | | 1. | Caroline W. Warui | 5 | 2,750,000.00 | | 2. | Hendrick Bruyn | 2 | 1,100,000.00 | | 3. | Eunice Muthoni Ndirangu | | | | 4. | Timothy Mutambuki John | 2 | 800,000.00 | | 5. | Mwende Mutambuki | | | | 6. | Lawrence Mwenda | 2 | 800,000.00 | | 7. | Moses Omondi | 2 | 1,100,000.00 | | 8. | Tabitha Mugechi | 1 | 400,000.00 | | | **Total** | **14** | **6,950,000.00** | 1. According to the Claimants, the material clauses of the contract are Clause 1(d) provided that the construction was to be completed on or before various dates in the year 2017; Clause 8 page 10 provided that payment had been/was to be completed at the signing the contract and/or taking possession of the units; Clause 8.5 if in the event that payment was not made by the Claimant(s) an interest would be levied on the same. 2. It is the Claimants’ case that at the time of the contract, the Respondent knew or ought to have known that the claimants were investing in the units for the sole purpose of obtaining a return on investment; that in breach of clause 1(d) of the contract, the Respondent failed to complete and assign the hostel units to the claimants; that by reason of the Respondents’ failure the claimants have suffered opportunity costs of having their monies held by the Respondent and also suffered damages in interest and loss of income; that the Claimants’ loss of income per unit is estimated as follows:- | | | | | | --- | --- | --- | --- | | **No.** | **Name of Claimant** | **No. of Units Purchased** | **Revenue per annum (kshs)** | | 1. | Caroline W. Warui | 5 | 960,000.00 | | 2. | Hendrick Bruyn | 2 | 384,000.00 | | 3. | Eunice Muthoni Ndirangu | | | | 4. | Timothy Mutambuki John | 2 | 384,000.00 | | 5. | Mwende Mutambuki | | | | 6. | Lawrence Mwenda | 2 | 384,000.00 | | 7. | Moses Omondi | 2 | 384,000.00 | | 8. | Tabitha Mugechi | 1 | 192,000.00 | | | **Total** | **14** | **2,688,000.00** | 1. By the terms of clause 14.3 of the agreement, on failure to complete, the Vendor shall refund the purchase price in full; that even with written communication to the vendor, the Vendor has failed to comply; that the claimants have suffered loss as a result and consequently pray for judgment against the Respondents for; 2. Refund of Kshs. 6,950,000/= to the individual claimants as per the aforesaid particulars as well as membership fees levied. 3. Damages for breach of contract of a total sum of Kshs 2,688,000.00/= per annum as tabulated above, for each year that the project failed to be delivered. Or as per what this Honourable Court may deem fit. 4. Interests pursuant to sec. 27(2) Civil Procedures Act or as the Court may deem fit. 5. Costs of this suit and other legal costs of Kshs. 27,840.00 6. Such further and/or other reliefs as this Honourable Court deems fit. 7. The Respondents responded to the Statement of Claim vide their joint Statement of Defence dated 24th January, 2023, filed on 10th February, 2023; that the 1st Respondent is a Cooperative Society that has elected officials; that the 1st Respondent has over 600 registered members. 8. The Respondents, in their response, deny the Claimants’ claims made in the Statement of Claim and aver further that the total number of hostel units from off plan approved by members on the AGM held on 23rd June 2015, at Geo Maps Centre was 500 hostel units that were to be built in two phases in Chuka; that initially it was agreed by the 1st Respondents' members that the development of the project was to be funded by members' contributions, however, the members' contribution was insufficient and the Respondent was forced to source for funds elsewhere thus the reason why the project is not complete; that the 1st Respondent has been able to build 185 units out of the 316 units in Phase 1 representing 58.5% delivery; that the project to date covers four (4) floors of seven (7) floors with other amenities including the Restaurant, Kitchen and Conference facility; that the 316 units including the amenities were originally budgeted at KShs. 142,954,972 (Kenya Shillings One Hundred and Forty-Two Million Nine Hundred and Fifty-Four Thousand Nine Hundred and Seventy-Two) exclusive of hostel facilities fixtures, fittings and furnishings, of which KShs. 84,731,035 (Eighty-Four Million Seven Hundred and Thirty-One Thousand Thirty-five) was been expended. 9. The Respondents aver that the 2nd and 3rd Respondents are wrongly and selectively enjoined in this claim, being members of the executive management committee, they are only meant to execute the members approved project(s) and were in no way meant to use their own funds to complete the project and any delays in raising additional funds to deliver the project in time was a collective responsibility of all the members and use of the funds that had been collected by the 1st Respondent for purposes of setting up the project were all deployed to the project to the levels of four (4) floors out seven (7) floors; that therefore there is no justification of the 2nd and 3rd Respondent being enjoined in this claim and must be expunged from the records. 10. The Respondents aver further that in the pre-incorporation AGM resolution passed on 23rd June 2015, it was agreed and resolution passed by members that: - *(Extract of AGM Minutes) Minute 4/2015 Mobimatt propose to build hostel units in Chuka, Tharakanithi County, with the initial proposal of about 500 units, restaurant and conference facilities. This will be carried in two phases. This being a new business venture, it carries high risks as well as the possibility of high rewards. The proceeds (Profit & loss) will be shared on by the members who have invested on the project. Projections in the plan have been compiled for illustrative purposes and do not constitute profit forecasts. The eventual outcome may be more or less favorable than that portrayed. The information is believed to be reliable, but the Cooperative makes no representations or warranties with respect to the information. The financial projections that are part of the plan represent estimates that are based on research and analysis, but are not guaranteed.* 11. It is the Respondent’s case that Members in the AGM held on 28th April 2018 approved the borrowing of Kshs 100 million to complete the project; that the 1st Respondent applied for a project funding facility from Cooperative bank of Ksh 80 million to complete the project (inclusive of the fittings, fixtures and furnishings to allow for occupation) and the request from the bank was that the 1st Respondent had first to improve their cash flow in its account; that the members unanimously approved that each member was to make a minimum monthly contribution of Kshs. 1000 into the Cooperative bank account, so as to meet the requirements of the bank; that however, the 1st Claimant rallied members NOT to make any further contributions to the 1st Respondent bank account and hence couldn't get the approval of the facility; that the 1st Respondent was forced to change the completion date of the project due to lack of funds as the strategy of depending on members' contributions was not forthcoming and hence slowed down the construction; that the 1st Respondents' Members again in 2019 authorised the board to pursue another bank loan to help complete the projection, failure to getting the loan the second option was to seek other external funding mechanisms that can deliver either phase 1 or phase 1 and 2 combined and the third option was to seek for the sale of the project as a going concern and that the selling price should be negotiated to cover all costs allowing refund to all members; that the members were further requested to propose to the board any possible/potential buyers or funders of which most of the members have been doing (in the interest of collective responsibility to save the project) and 1st respondent has been eagerly pursuing such proposals as they are presented/suggested; that further, the Members were encouraged to pay their outstanding instalments to allow for completion and the default caused the delays and till to date majority of members have not honoured their instalments including the 7th Claimant who had secured 5 units at a total of Ksh 2,750,000 but only managed to pay Ksh 980,000 leaving a deficit of Ksh 1,770,000. 12. The Respondents aver that no interest was levied to the members that did not pay their instalments as there was a request by members that external funds be sought or raised as the country had just gone through the chaotic 2017 elections and the economy was not doing well; that the claimants were fully aware that this is an investment cooperative and that the projects can only be completed through successful member's investment contributions in the project collectively; that the project was a collectively/shared responsibility of all members and the force majeure had to kick in as the circumstances were beyond the control of 1st respondent taking into account members inability to contribute more monies and hostility groupings organised by the 1st claimant that forced the 1st respondent to miss on the approved loan offer from cooperative bank. 13. The 1st Respondent is an investment society and the risks (profit and losses) are shared amongst all members not a few members. The return on monthly income was to be enjoyed upon completion by all members; and if the payments were to be made it must come from members who includes them and must be approved by all members at a AGM. 14. The members approved no refund and more money was to be raised to allow for the project to be completed. 15. The 1st Respondent avers that the project is not complete because of the Claimants rallying other members to stop the contributions to the society. 16. Further the 4th Claimant is not a member of the 1st Respondent as he has not fulfilled the minimum thresh hold for membership eligibility. As per the Pre-incorporation AGM minutes held on 23rd June 2015 and resolution passed and approved: *(Extract of AGM Minutes) Minute 2/2015 Membership is subject to a payment of non-refundable Entrance Fee of KShs. 5,000 and minimum of KShs. 15,000 share capital as provided for in the Society's by-laws up to a maximum of one fifth of the total members share capital.* 17. The Respondents aver that they did not enter into any agreement with any of the Claimants and if any agreement was entered it was entered without proper authority and/or null and void. 18. Further the Respondents deny being responsible for any losses and damages suffered by the claimant as a result of failure to honour the alleged agreement and that no demand and/or notice of intention to sue ever preceded the institution of this suit and if any were issued, which is denied, they were not obligated to make good the Plaintiff's claim for the reasons aforesaid. **CLAIMANT’S CASE AT THE HEARING:** 1. At the hearing of the matter, the 1st Claimant, Caroline Warui, adduced sworn evidence on behalf of the rest of the Claimants. The 1st Claimant adopted her witness statement as her evidence in chief and stated on that the Claimants were members of the 1st Respondent and paid about 7 million Kenya Shillings to the 1st Respondent to purchase hostel units in a project in Chuka, but to-date, have not got the units or income therefrom; that the Claimants seek to be given their units or be refunded their money with interest; that each Claimant also paid the sum of Ksh. 20,000,000/= for membership which is not part of the claim; that the 1st Claimant paid Ksh. 2,750,000/=; that the 2nd and 3rd Claimants paid Ksh. 1,100,000/=; that the 4th and 5th paid Ksh. 800,000/=; that the 7th Claimant paid Ksh. 1,100,000/=; that the 8th Claimant paid Ksh. 400,000/=. 2. On Cross-Examination, the 1st Claimant stated that the 1st Respondent is an investment society and the project was being funded by members; that the society had 600 members and she became a member in October, 2016; that she was not aware how the resolution of the Annual General meeting of 23/06/2015 were arrived at; that in 2018, members were granted approval to borrow Ksh. 100,000,000/=; that she is aware that Cooperative bank gave the 1st Respondent an offer of Ksh.80,000,000/=, contingent on cash flow from members; that she did not rally other members not to make contributions; that she did not default and she is not aware of any member who defaulted; that she has never gone through the By-laws of the Society, as they were not available as the Society has no office; that she made a request for the By-laws and she has email and chat communication with the 1st Respondent; that she is aware of the membership fee of Ksh. 5,000/= and Share Capital of Ksh. 15,000/=; that the 1st Respondent has completed 265 units in the project; that the claim was not brough to court prematurely. 3. On Re-Examination, the 1st Claimant stated that they have chats with the 1st Respondent to show their frustrations; that attempts to get additional funding failed; that the 1st Respondent had stated Ksh. 35,000,000/= was required to complete the project. 4. On clarification being sought by members of the Tribunal, the 1st Claimant stated that the contract indicated that the project would be completed in the year 2017. **RESPONDENTS’ CASE AT THE HEARING:** 1. The 2nd Respondent, Duncan Otieno, adduced sworn evidence on behalf of the Respondents and stated that he is an Investment Analyst and Chairman of the 1st Respondent and adopted his witness statement as his evidence in Chief. 2. On Cross-Examination, the 2nd Respondent stated that the members in the project are 78 and he is not aware of a difference in the number in the whatsapp group; that the Society Board called for a meeting in regards to the requests for agreements by the Claimants; that the agreement had a refund clause but no refunds had been done; that Management purchased land adjacent to the project. 3. On Re-Examination, the 2nd Respondent stated that there was refund made as there were no funds for refund. 4. On clarification being sought by members, the 2nd Respondent stated that the last meeting was held in the year 2014 and the Claimants did not attend any of the meetings; that the Society does not have a physical office. **CLAIMANTS' SUBMISSIONS** 1. In the Claimants’ Submissions of May, 2026, the Applicants aver that there was breach of contractual and statutory duties by the Respondents, leading to the failure of the hostel project, which has occasioned the Applicants' losses claimed. 2. The Claimants submit that they entered into a contractual agreement to purchase residential hostel units, under construction by the 1st Respondent near Chuka University on a parcel of land title number Karinga/Ndagani/11354; that the construction was for prefabricated units, and due to the close proximity with Chuka University and reported shortage of student housing, were to be leased by 4 students at KES 5,000/= per unit, per month leading to a total income of KES 20,000/= per month (KES 240,000/= annually); that the 1st Respondent was to form a management company, which would charge 20% on the income per unit (an amount of KES 4,000/= per month; (KES 48,000/= annually) and the balance of the KES 16,000/= (KES 192,000/= per annum) was to be paid to the owner of the hostel unit; that the total payments made by 8 applicants were KES 6,970,000/= to acquire a total of 14 hostel units; that the hostel project remains incomplete 9 years after the deadline for completion given by clause 1.1 (d) of the contract as at the 2nd day of October 2017. 3. The Claimants’ submissions raise the following issues for determination: 1. Whether Respondents breached: **a) Contract terms & By-Laws:** The Claimants submit that they paid for their units as per the agreement, therefore complied with their mandate and should be entitled to damages from the Respondents; that they reference ‘Shaneebal Limited v County Government of Machakos [2018] eKLR’ wherein it was determined that the Plaintiffs were entitled to damages having performed their duties as per the agreement; that the Respondents on the other hand, though required by Clause 2.1 of the Agreement to procure, at own cost and expense, all approvals, consents, licences, permits…” “Carry out and complete… at its own cost risk and expense the Works…” Clause 2.2 and most importantly ………….. refund the full purchase price paid… within Fourteen (14) days… without any deduction, set off or counter-claim whatsoever Clause 14.3 have manifestly failed to do so; that further even though the 1st Respondent’s By-Laws allowed for withdrawal from membership, when 3 of the Claimants completed the relevant forms they were not reimbursed their funds; that further the 2nd Respondent advised that upon withdrawal, one should be removed from the group chat, which was the only source of information, contrary to the findings of ‘Wambui v Hallmark Marketing Limited (Petition E097 of 2022) [2026] KEELRC 138 (KLR) (28 January 2026)’ wherein the Court determined that the Respondent's actions constituted a repudiatory breach of contract; and awarded compensation acknowledging that there were constitutional rights violations; that the threats by the 2nd Respondent caused the other Claimants to be afraid to withdraw, as they feared information would be inaccessible to them, and that they would lose their investment. **b) Statutory duties:** The Claimants submit that the Respondents breached their statutory duties under Sections 21(d), 23 & 27(2) of Cooperative Societies Act (Cap 490) and state that the 1st Defendant should have maintained a registered address; that the 1st Defendant ought to have conducted annual general meetings; that to the Claimants’ knowledge, there was a meeting held in April 2018 and another in February 2023 at Chuka, which contributed to the lack of accountability by the Respondents; that even when the meetings were held the Claimants had no access to the membership register as per S.21(d) hence could not determine whether the persons voting were legitimately invested in the hostel project; that overall the hostel project had 105 members, but the 2nd and 3rd Respondents maintained that the 1st Respondent has a total membership of 600 members. 2. Whether Claimants are entitled to: **a) Refund with interest:** The Claimants submit that they are entitled to: (i) Refunds of the monies already paid out; (ii) Interest on the refunds; referencing ‘Lei Masaku v Kalpma Builders Ltd [2014] eKLR:’ which established that interest on special damages (money already spent) should run from the date of filing the suit…. **b) General damages:** It is the Claimants’ submissions that since the Claimants lost the opportunity to earn KES 16,000/= per month on units purchased, as well as lost the opportunity to invest their money into any other venture, they should be entitled to general damages as well as a refund of their investment. They reference ‘Butler v Butler [1984] KLR 225' wherein the appellate court upheld 'loss of earning capacity as a valid head of damages in a personal injury claim. 1. The Claimants further argue in their submissions that the 1st Respondent, being an Investment Cooperative and being aware that its members were joining the Cooperative to earn a return on investment, fundamentally breached the terms of the contract by failing to construct the student hostels, as per the court’s findings in 'Mhasibu Bustani Management Co. v Mhasibu Housing Co. Ltd [2026] KEELC 192' which reinforces that failing to provide promised infrastructure can be treated as a fundamental breach affecting the very "substratum" of a sale; that further the Claimants are concerned that the Respondents viewed the 105 members in the hostel investment as 'cashcows' to raise funds, for the 1st Respondent and therefore expose their investment to the risk of loan default, instead of utilizing the funds to construct the student hostels; that the Respondents through their office maintained that the cost to deliver the building to completion was KES 35Million, yet the 2nd and 3rd Respondents pursued a loan for KES 100Million the utilization of which was not advised to the Claimants, hence, they view it as an attempt for unjust enrichment; that violations by the 2nd & 3rd Respondents while aware of their responsibilities under S. 28(6) of the Cooperative Societies Act led to the failure of the student hostel construction project. 2. The Claimants submitted on the violations as follows: **(a) Failure to hold meetings** **Section 27(1), Cooperative Societies Act:***"Subject to subsection (3) a co-operative society shall hold an annual general meeting within four months after the end of each financial year."* **(b) Lack of registered office** **Section 23, Cooperative Societies Act:***"Every co-operative society shall have a registered address to which notices and communications may be sent and shall send to the Commissioner notice of every change of address within one month of the change."* The Claimants argue that the violation of S.23 and 27 (1) by the Respondents limited access to records and prevented oversight by the members, which was detrimental to the Chuka hostel project, as the construction stalled due to lack of funds; that proper oversight would have led to scaling of the project and avoided misallocation/misappropriation of funds; that the 2nd & 3rd Respondents therefore did not exercise prudence and diligence and are properly enjoined in this suit. 1. The Claimants submit on the quantification of their claim as follows: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **No** | **Name** | | **No. of Units** | | **Principal sum (KES)** | | **Loss of Rent 4.5 yrs (KES)** | | **Interest on Principal 4.5 yrs (7%)** | | **Legal fees (KES)** | | **Total Claim (KES)** | | | 1. | Caroline Warui | | 5 | | 2,750,000 | | 2,160,000 | | 866,250 | | 52,840 | | 5,829,095 | | | 2. | Hendrik Byrun | | 2 | | 1,100,000 | | 864,000 | | 346,500 | | 10,000 | | 2,320,502 | | | 3. | Eunice Muthoni | | | | | | | | | | | | | | | 4. | Timothy Mutambuki | | 2 | | 820,000 | | 864,000 | | 258,300 | | 10,000 | | 1,952,302 | | | 5. | Mwende Mutambuki | | 2 | | 800,000 | | 864,000 | | 252,000 | | 10,000 | | 1,926,002 | | | 6. | Lawrence Mwenda | | | | | | | | | | | | | | | 7. | Moses Omondi | | 2 | | 1,000,000 | | 864,000 | | 315,000 | | 10,000 | | 2,189,000 | | | 8. | Tabitha Mugechi | | 1 | | 400,000 | | 432,000 | | 126,000 | | 5,000 | | 963,001 | | | | **TOTAL** | | **14** | | **6,870,000** | | **6,048,000** | | **2,164,050** | | **97,840** | | **15,179,902** | | 1. Principal sum: Total KES 6,870,000/= 2. Interest proposed from 7% fixed deposit rates to 14% p.a. as per (gazette Notice 11168 of 2000); KES 2,164,050/= to KES 4,328,100/= 3. General damages for: - Loss of rent (Butler v Butler [1984] KLR 225)- assuming an occupancy of 50% per unit Total KES 6,048,000/=; and at an occupancy of 100% per unit Total KES 12,096,000/=; that as demonstrated, the Claimants have lost between KES 15,179,902/= and KES 23,457,100/=; that the Claimants pray for KES 15,179,902/= being a reasonable determination of the losses incurred, as tabulated comprising of: | | | | --- | --- | | 1. Total refund | KES 6,870,000/= | | 2. 7% interest (4.5 years) | KES 2,164,050/= | | 3. Total general damages of | KES 6,048,000/= | | 4. Total costs of suit | KES 97,840/= | | 5. Refund of Membership fees of | KES 100,000/= | **RESPONDENTS' SUBMISSIONS** 1. In the submissions dated 3rd June, 2026, the Respondents submit that the 1st Respondent is an Investment Co-operative Society duly registered under the Co-operative Societies Act (Cap. 490) while the 2nd and 3rd Respondents are elected officials of the 1st Respondent; that the Claimants are members (save for the 4th Claimant) who entered into agreements for the purchase of hostel units in a student housing project in Chuka, within Tharaka Nithi County; that the total number of hostel units from off plan approved by members on the AGM held on 23rd June 2015, at Geo Maps Centre was 500 hostel units to be built in two phases; that the members, the Claimants being among them approved that the development of the project was from the members' contributions and since it was a new Investment Cooperative Society, there were no chances of getting a loan to complete the project and hence members had to be faithful in their contributions and/or to buy all the units available to allow the completion of the Hostel units; that the project was to be built from the contribution/ proceeds derived from the sale of the units; that the 1st Respondent has been able to build 185 units, Restaurant, Kitchen and Conference facility covering 4 floors in Chuka. 2. The Respondent submits that the 1st Respondent was to manage the completed hostel units and NOT the 2nd and 3rd respondent; that in the pre-incorporation AGM resolution passed on 23rd June 2015, it was agreed and resolution passed by members that: - 3. Minute 4/2015 Mobimatt propose to build hostel units in Chuka, Tharaka-Nithi County, with the initial proposal of about 500 units, restaurant and conference facilities. This was to be carried in two phases. This being a new business venture, it carries high risks as well as the possibility of high rewards. The proceeds (Profit & loss) will be shared by the members who have invested on the project. 4. Projections in the plan had been compiled for illustrative purposes and do not constitute profit forecasts. The eventual outcome may be more or less favorable than that portrayed. The information is believed to be reliable, but the Cooperative makes no representations or warranties with respect to the information. The financial projections that are part of the plan represent estimates that are based on research and analysis, but are not guaranteed. 5. The Respondents further submit that Members in the AGM held on 28th April 2018 approved the borrowing of Kshs 100 million to complete the project, and the 1st Respondent received an offer letter from Cooperative Bank for a facility of Ksh 80 million and the request was for the 1st respondent to improve their cash flow by making contributions to the bank account with cooperative bank, the members approved the monthly contributions of Kshs. 1,000 minimum to improve the cash flows to allow for the loan to be issued, however it is the 1st Claimant who rallied members NOT to make any further contributions to the 1st Respondent and hence couldn't get the approval of the facility; that the Completion date was changed by the members to look for outside funds as opposed to members' contributions which were not forthcoming and hence slowed down the construction; that Members were encouraged to all pay their outstanding instalments to allow for completion and the default caused the delays and till to date majority of members have not honoured their instalments including the Claimant who had secured 5 units at a total of K.Shs. 2,750,000 but only managed to pay Ksh 980,000 leaving 1st Respondent with a deficit of K.Shs. 1,770,000/=; that no interest was levied to the members that did not pay their instalments as there was a request by members that external funds be sought or raised as the country had just gone through the chaotic 2017 elections and the economy was not doing well; that the claimants were fully aware that this is an investment cooperative and not a limited liability company and that the projects can only be completed through successful members' investment contributions in the project collectively; that the members approved no refund and more money to be raised to allow for the project to be completed; that the claimants made the 1st Respondent not to complete the project by rallying other members to stop the contributions to the society hence should be paying the 1st Respondent for sabotaging the project involving over 80 members who have acquired the units through activism. 6. The Respondent submits that the 4th Claimant is not a member of Mobimatt Investment Cooperative since he has not fulfilled the minimum requirement for membership eligibility. As per the Pre-incorporation AGM minutes held on 23rd June 2015 and resolution passed and approved: Minute 2/2015 Membership is subject to a payment of non-refundable Entrance Fee of KShs. 5,000 and minimum of KShs. 15,000 share capital as provided for in the constitution. 1. The 1st Respondent submits that it is at an advanced stage of raising external financing for the project; that the financing is being syndicated through a consortium of local and international financial institutions using a mix of structured financial instruments; that the primary objective of these efforts is to ensure that no member loses their investment and that the value of the entire project is preserved and enhanced for the benefit of all members. 2. It is the Respondents’ submissions that flowing from the documents relied upon by the parties and the testimonies by the parties, it has become evident that the Claimants' case is fundamentally flawed, as they admitted to the collective risks of the venture and their own role in the project's stagnation. 3. The Respondents raise the following issues in their submissions: 4. Whether the 2nd and 3rd Respondents are properly joined as parties in this suit. 5. Whether the 4th Claimant has the legal standing (locus standi) to bring this claim. 6. Whether the Respondents are in breach of contract given the collective nature of the investment cooperative. 7. Whether the Claimants are entitled to the reliefs sought. 8. Whether the Claimants' claims, if granted, will fundamentally affect all the investors in the project. 9. On**whether the 2nd and 3rd Respondents are properly joined as parties in this suit**, the Respondent submit that under Section 12 of the Co-operative Societies Act, upon registration, a society becomes a body corporate with perpetual succession and the power to sue and be sued in its own name. The said Section 12 provides that: *"Upon registration, every society shall become 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 of every description, to enter into contracts, to sue and be sued and to do all things necessary for the purpose of, or in accordance with, its by-laws”;* that the 2nd and 3rd Respondents are merely elected officials by the members and were acting within their mandate as provided in the Constitution and applicable laws; that the Claimants have failed to prove any personal liability or piercing of the corporate veil; that under Section 26, committee members are only jointly and severally liable for losses sustained through acts contrary to the Act, rules, or by-laws; that the evidence shows the officials applied all collected funds (K.Shs. 84.7 million) directly to the construction of 185 units and amenities a fact that has not been contested by the Claimants; that Section 26 provides that: *"In the conduct of the affairs of a co-operative society the Committee shall exercise the prudence and diligence of ordinary men of business and the members shall be held, jointly and severally liable for any losses sustained through any of their acts which are contrary to the Act, rules, by-laws or the directions of any general meeting of the co-operative society”;* thatin line with the principle in Salomon v Salomon & Co Ltd [1897] AC 22, the Society is a separate legal entity and the 2nd and 3rd Respondents should be expunged from these proceedings and any claim against them dismissed with costs. 1. On **Whether the 4th Claimant has the legal standing (locus standi) to bring this claim,**the Respondents submit that Sections 14 and Section 17 of the Act mandate that a member must meet specific qualifications and make prescribed payments to exercise membership rights; that Section 14 provides that *"A person other than a co-operative society shall not be qualified for membership of a co-operative society unless: (a) he has attained the age of eighteen years, (b) his employment, occupation or profession falls within the category or description of those for which the co-operative society is formed; and (c) he is resident within, or occupies land within, the society's area of operation as described in the relevant by-law”;* that Section 17 provides that *"No member of a co-operative society shall exercise any of the rights of a member unless he has made such payment to the society in respect of membership, or has acquired such interest in the society as may be prescribed under this Act or under the by-laws of the society”;* that as per Minute 2/2015 of the AGM, membership requires a K.Shs. 5,000 entrance fee and a minimum share capital of Ksh 15,000. The 4th Claimant, Timothy Mutambuki, has failed to meet this threshold; that no evidence was produced by the Claimants to rebut this contention, it ought to be sustained that the 4th Claimant has no claim as against the Respondents; that having failed to satisfy the statutory and by-law requirements for membership, the 4th Claimant has no locus standi before this Tribunal and his claim as against the Respondents ought to be dismissed with costs. 1. On **Whether the Respondents are in breach of contract given the collective nature of the investment;** the Respondents submit that the Claimants acknowledged and admitted during cross-examination that the project was a new business venture carrying high risks, as resolved in Minute 4/2015 of the AGM; that this was an investment project to be undertaken by funding from the members and that it is only when the members' funding was not being contributed as they should that led to the stalling of the project a fact so admitted by the Claimant during the hearing of this matter; that the 1st Respondent's failure to secure a KShs. 80 million loan from Co-operative Bank was directly caused by the 1st Claimant, who organized members to stop the mandatory KShs. 1,000 monthly contributions required by the bank to demonstrate cash flow; that a party cannot benefit from a frustration of contract which they themselves caused; that the 1st Claimant then proceeded to file this suit and seek the orders they are seeking; that he 7th Claimant (Moses Omondi) claims breach of contract while he himself is in gross default, having paid only Ksh 980,000 out of a contract price of Ksh 2,750,000.00; that the Claimants cannot therefore benefit from a frustration they themselves caused; that under the cooperative principle of Economic Participation under Section 4, members share both profits and losses; that the Claimants admitted they were aware that projections were illustrative and not guaranteed; that this admission and the provisions of Section 4 of the Act, makes their claim unsustainable in law and ought to be dismissed with costs; that Section 4 provides that: *“Subject to the provisions of this Act, a society which has as its objects- (b) has incorporated in its by-laws the following co-operative principles- (iii) economic participation by members;”* that Section 27 vests supreme authority in the General Meeting. The said section 27 of the Act provides that: *"The supreme authority of a co-operative society shall be vested in the general meeting at which members shall have the right to attend, participate and vote on all matters;"* that it has not been disputed that the 1st Respondent did hold a General Meeting prior to the commencement of this project and even subsequent to when funding challenges started being experienced; that in the AGM Resolution of the 1st Respondent, the members resolved not to issue refunds but to instead raise more funds or seek a buyer for the project as a going concern to ensure all members are eventually compensated; that It has not been disputed that the Respondent has already delivered 58.5% of Phase 1 (185 units, restaurant, and conference facilities); that therefore the claim is immature; that allowing individual refunds now would contravene the AGM's democratic decision and jeopardize the collective interests of the other 600 members. 1. On **Whether the Claimants are entitled to the reliefs sought,**the Respondents submit that the Claimants have acted contrary to the legal maxim of "he who alleges must prove" and section 107 and 108 of the Evidence Act which provides that: *"(1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. (2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person."* that the Claimants have failed to prove their claim or actions by the Respondents that breached either the provisions of the Act or the Constitution and By-Laws of the 1st Respondent; that it is obvious that the Claimants are not entitled to any prayers as sought in the Claimants claim. 1. On **Whether the Claimants' claims, if granted, will fundamentally affect all the investors in the project.** It is the Respondents' humble submission that granting the Claimants the reliefs sought would fundamentally and adversely affect the collective interests of all investors/members of the 1st Respondent Cooperative Society, estimated at over 600 members, and would undermine the very nature of a cooperative investment venture; that the project in question is a collective investment project duly approved by the General Meeting of members; that the evidence on record shows that the 1st Respondent has already achieved 58.5% completion of Phase 1, having constructed 185 housing units together with associated amenities (restaurant and conference facilities) using member contributions totalling Kshs. 84.7 million; that this progress was made possible through the collective will and financial participation of the membership; that granting individual refunds or the orders sought by the Claimants would make it impossible to complete the remaining phases, prejudice the rights of the majority of members who have continued to honour their financial obligations and who are relying on the successful completion of the project in order to recoup their investments, contravene the democratic decision of the Annual General Meeting (AGM) which resolved not to issue refunds but instead to mobilise additional funds or dispose of the project as a going concern so that all members can eventually be compensated (AGM Resolution referred to in evidence), this democratic resolutions automatically revised all previously presented delivery timelines, violate the cooperative principle of economic participation by members under Section 4 of the Co-operative Societies Act, which requires members to share both the risks and rewards of the society's undertakings; that a cooperative society is not a vehicle for individual speculative investment where members can demand exit and refunds at will once challenges arise, but a body corporate with perpetual succession whose decisions are binding on members through the supreme authority of the General Meeting; that allowing a few dissenting members to pull out their contributions at this stage would set a dangerous precedent that could trigger mass withdrawals, collapse the project, and cause loss to the innocent majority who remain committed, thus making it hard for the officials to raise additional funds which are currently at advanced stages of realisation with Local and international financial institutions; that The Claimants themselves admitted under cross-examination that this was a high-risk new business venture and that delays were partly occasioned by members' failure to make consistent contributions; that the Claimants cannot now seek to exit the collective arrangement while leaving the burden on the remaining members; that the Claimants' claims are not only premature but also inimical to the interests of the wider membership; that any order for refunds or dissolution of the project at this stage would be inequitable, contrary to the Co-operative Societies Act, the Society's by-laws, and the democratic will of the General Meeting; that the claims ought to be dismissed in their entirety with costs to protect the collective investment of all members. **ANALYSIS AND DETERMINATION** 1. We have considered the pleadings and documents filed by the Claimants and the Respondents. We have also considered the extensive submissions of the parties. The only issue arising for our consideration is whether the Claimants are entitled to the orders sought in the statement of Claim. 2. It is trite that he who makes a claim must prove the same on a balance of probability. 3. It is not in dispute that the Claimants entered into agreements with the 1st Respondent as investors in the 1st Respondent’s Chuka Hostel project. 4. Further it is not in dispute that despite money having been collected from the Claimants and other members, towards the project, the same was not completed, due to shortage of finances. 5. From the evidence of the parties, it is clear that out of the 1st Respondent’s 600 members, the members who invested in the project do not exceed 100, precisely, the 2nd Respondent stated on cross examination, that the members in the project are 78; that out of the 500 units proposed for the project in 2017, the 1st Respondent partially completed only 187 units as at October, 2019; that the units have not been completed to date. 6. Further, uncontroverted evidence was adduced at the hearing that the 1st Respondent purchased additional land adjacent to the subject project while the project is pending. It is not clear why the 1st Respondent opted to purchase additional land while the initial project was pending. 7. It is on record that the Annual General Meeting that passed the resolution for the subject project was held in the year 2014 and none of the Claimants herein were present. We note from our analysis of the Whatsapp Group discussions between the 1st Respondent’s officials and the investors between 11th October, 2019 and 18th January, 2020, that the 1st Respondent and the Investors deliberated at length on the issue of the failure of the project and that the investors asked severally for the minutes or details of the 2014 Annual General meeting and the copy of the By-laws; that however, there is no indication that the same were provided; that however, the investors agreed to the 1st respondent sourcing finances from financial institutions or for buyers to take up the project or units; that there is evidence that Co-operative Bank made a loan offer to the 1st Respondent, of Ksh. 100,000,000/= subject to the condition that the 1st Respondent’s member deposits would be enhanced to Ksh. 10,000,000/=; that a similar condition was given by I & M Bank to the 1st Respondent. 8. We note that the 1st Respondent was not granted financing by either bank as it failed to meet the deposit condition; that there is no evidence that the 1st Respondent engaged any other financier, local, or international, despite stating in the Respondents’ pleadings and submissions that additional funding is at an advanced stage. Despite the Respondent’s averments that the 1st Claimant instigated the investors against paying the monthly deposit of Ksh. 1000/= each towards the bank savings, there has been no evidence of such a campaign by the Claimant. 9. We note that due to failure of the 1st Respondent to obtain funding or sell the units or project to other investors, the project stalled and has never taken off, to date; that it is on this account that the Claimants argue that they are entitled to invoke the exit clause in the agreement and to seek orders for refund of their investment and payment of damages. 10. Whereas we agree with the 1st Respondent that the investment is a collective responsibility of members, it is a fact that each investor had a separate contract with the 1st Respondent and that each investor, the Claimants included, made independent payments towards identifiable units of the project. From the evidence on record, the Claimants and other investors issued refund notices to the 1st Respondent, but no refunds were made as admitted by the 2nd Respondent for the reason that there was no money for refund. 11. It is admitted by the 1st Respondent Chairman, that the 1st Respondent has no physical office and has not kept a proper register of members as required by the Cooperative Societies Act; It is our finding that the 1st Respondent thereby breached fundamental cooperative societies laws. 12. Whereas there is no evidence that the Respondents have unfairly enriched themselves through the member contributions, we find that there is lack of diligence in how the entire process of planning and conduct of the project was handled by the 1st Respondent’s officials, that led to inability to complete the project and resulted in an avoidable frustration of the agreements. Be that as it may, we cannot turn a blind eye to the fact that the Claimants paid money to the 1st Respondent on the promise that the 1st Respondent would deliver the investment; that Responsibility was upon the 1st Respondent therefore to put in place proper plans and safeguards to ensure that the project succeeded. It is not prudent for the 1st Respondent to say that the Claimants knew at the time of paying the money, that the project projections were merely illustrative when in fact the 1st Respondent’s management had a duty to ensure the project was based on sound and professionally obtained Bills of Quantities and architecture as would be expected of prudent and diligent persons of business. The Claimants and the Respondent refer to the 2nd and 3rd Respondents as members of the Board of Management, elected to run the 1st Respondent. However, it is clear from the pleadings and other documentary evidence that the whereas the 2nd Respondent was the Chairman of the 1st Respondent, the 3rd Respondent was the Chief Executive officer or CEO of the 1st Respondent. It is trite that the duty of running a society is vested in the elected Board of Management while the CEO is an employee of the Society. In the circumstances, the person responsible for the project in the present case in terms of the Cooperative Societies Act, is the 2nd Respondent, who we find to be culpable. 13. The 1st Respondent’s averment that the 4th Claimant is not a member of the society, raises further questions as to how the 1st Respondent’s business was being conducted. Evidence before the Tribunal indicates that the 1st Respondent received the sum of Ksh. 820,000/= from the 4th Claimant and admitted the 4th Claimant to the Project. It would therefore be untenable for the 1st Respondent to turn around at this point and claim that the 4th Claimant is not a member and should not be a claimant before the Tribunal. 14. On the issue of damages, it is our finding that the Claimants entered into the contracts with the 1st Respondent with the full knowledge of the collective purpose that was intended to work towards the delivery of the project; that they are aware that the contracts between themselves and the 1st Respondent were frustrated on account of various factors including non-payment of investment money, non-payment of monthly contributions, poor planning and poor management, and other circumstances such as the market and covid-19. We are therefore not inclined to make an order for damages for loss of profit. However, the Claimants are entitled to interest at Tribunal rates and a nominal amount on exemplary damages on account of the 1st Respondent’s negligence. The Claimants are however not entitled to refund of membership fees and share capital. 1. In view of the foregoing, we discharge the 3rd Respondent from the claim and hold that the Claimants have proved their claim against the 1st and 2nd Respondents jointly and severally. 2. Consequently, we enter judgement herein against the 1st and 2nd Respondents jointly and severally, as follows: 3. The 1st and 2nd Respondents jointly and severally, to refund to the Claimants the total principal sum of Kshs. 6,780,000/= with interest thereon at Tribunal rates from the date of filing of this claim until payment in full. 4. The 1st and 2nd Respondents to jointly and severally pay to each Claimant the sum of Ksh. 50,000/= in exemplary damages. 5. The Claimants are awarded the costs of this suit. 6. There be a stay of execution of this judgement for Forty-five (45) days from the date hereof. Judgement signed, dated and delivered *virtually* at **Nairobi** this **20th** day of **August, 2026.** **Hon. J. Mwatsama Chairperson Signed** **20.8.2026** **Hon. Beatrice Sawe Member Signed 20.8.2026** **Hon. Fridah Lotuiya Member Signed 20.8.2026** **Hon. Paul Aol Member Signed 20.8.2026** **Hon. Michael Chesikaw Member Signed 20.8.2026** **Tribunal Clerk Jemimah** Caroline Warui - present Tabitha Mugechi- present Hendrik Bruyn -present Mobimatt Investment Cooperative Society – No appearance **Hon. J. Mwatsama Chairperson Signed 20.8.2026**