They can use it BUT the thing is that they were provided free housing with a daily stipend. Nothing came out of their pocket during the repair.
It will come down to a judgement call by the Judge. The one thing I would question if I were a judge is why are they waiting 2 years to stop paying rent and using this incident as an excuse? I would question if they were still employed and if perhaps that was the real reason they weren't paying rent for the last two months.
Get the paperwork, receipts and copies of any correspondence the association has surrounding what they did and communicated to the tenants. I have a funny feeling they are going to claim that all expenses came out of their own pockets. Do you have any written communication from the tenants showing that they stopped paying for any other reason?
I hope you have a lawyer handling this for you since the tenants have lawyered up with one who is not afraid or embarrassed to pull at straws.