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Court of AppealPartially AllowedCivil Appeal 18 of 2020· [2022] KECA 769 (KLR)

Diamond Trust Bank Kenya Limited v FHH

Court of Appeal
24 June 2022
SKS. Gatembu KairuPNP. NyamweyaJLJ. Lesiit
3,924 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that disputes to stop a bank selling charged property belong in the High Court, not the Environment and Land Court.

What this practically means

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Executive summary

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The appellant, Diamond Trust Bank Kenya Limited, appealed against a ruling of the Environment and Land Court at Mombasa (Munyao Sila, J.) granting the respondent, FHH (wife of the chargor KHA), an interlocutory injunction restraining the Bank from exercising its statutory power of sale over property charged to secure advances of Kshs. 17,200,000 to Siyama Company Limited, on the ground that her spousal consent to the charge had not been obtained. The chargor had previously made two failed attempts before the High Court at Mombasa (Civil Case No. 131 of 2014) to stop the sale. The Court of Appeal framed two issues: the ELC's jurisdiction and, alternatively, the propriety of the injunction. On jurisdiction, the Court followed its binding decision in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others, holding that the creation of a charge has nothing to do with 'use' of land under Article 162(2)(b) of the Constitution, and that disputes to restrain a bank from exercising its statutory power of sale are commercial matters for the High Court. The ELC's contrary holding flew in the face of that precedent. The Court further found the ELC suit smacked of forum shopping and abuse of process given the pending High Court suit over the same subject matter, in which the spousal consent issue had already been raised. Having found the ELC lacked jurisdiction, the Court declined to address the merits of the injunction. The appeal was allowed; the ELC ruling was set aside and substituted with an order striking out the respondent's injunction application, and the respondent's suit was struck out with costs to the appellant.

Key legal issues

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01

Jurisdiction of the ELC over disputes relating to charges and statutory power of sale

Holding

The ELC lacked jurisdiction; restraining a bank from exercising its statutory power of sale under a charge is a commercial matter for the High Court. The learned Judge's holding that a charge is an instrument granting an enforceable interest in land conferring jurisdiction on the ELC flies in the face of Co-operative Bank v Kangethe Njuguna.

Reasoning

Following Co-operative Bank v Kangethe Njuguna, the creation of a charge is limited to securing repayment of money advanced and has nothing to do with 'use' of land under Article 162(2)(b). The ELC's jurisdiction over contracts granting enforceable interests in land must be understood within the context of disputes connected to 'use' of land, and does not include mortgages, charges, collection of dues and rents, which fall within the civil jurisdiction of the High Court. The ELC and ELRC, being autonomous courts, cannot hear matters reserved to the High Court.

p. 6
02

Sub judice, forum shopping and abuse of process

Holding

The respondent's suit before the ELC smacked of forum shopping and abuse of process, given the pending Mombasa High Court Civil Case No. 131 of 2014 over the same subject matter, in which the spousal consent issue had already been raised by the husband.

Reasoning

There was already pending before the High Court a suit over the same subject matter in which the husband had made two failed attempts to obtain injunctive relief and had himself asserted that he did not seek his wife's consent to charge the property. The spousal consent issue was therefore not raised for the first time before the ELC. The respondent instituted the ELC suit only after the husband's second failed attempt, a practice the Supreme Court frowned upon in Albert Chaurembo Mumba & 7 others v Maurice Munyao & 148 others.

p. 6
03

Whether the ELC properly exercised its discretion in granting the interlocutory injunction

Holding

Not addressed; having found the ELC lacked jurisdiction, the Court declined to consider the merits of the injunction.

Reasoning

Having concluded that the proper forum for adjudication of the respondent's suit is the High Court and not the ELC, and that the learned Judge erred in asserting jurisdiction, the Court found it unnecessary to address whether the Judge judiciously exercised his discretion in granting the interlocutory injunction.

p. 6

Legal principles established

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  • A charge by a chargee over land, and disputes to restrain a bank from exercising its statutory power of sale, are commercial matters for the High Court, not the ELC; the creation of a charge has nothing to do with 'use' of land.
  • The ELC and ELRC cannot hear matters reserved to the jurisdiction of the High Court, just as the High Court is precluded from entertaining matters reserved to the ELC and ELRC.
  • A court's jurisdiction flows from the Constitution or legislation or both, and a court cannot arrogate to itself jurisdiction exceeding that conferred by law.

Court orders

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  1. 1.The appeal is allowed
  2. 2.The ruling of the ELC is set aside and substituted with an order striking out the respondent's application for injunction dated June 13, 2019
  3. 3.The respondent's suit before the ELC is struck out with costs to the appellant

Authorities

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Legislation

  • Constitution of KenyaArticle 162(2)(b)
  • Constitution of KenyaArticle 165(5)
  • Land Act, No. 6 of 2012Section 79(3)
  • Land Act, No. 6 of 2012Section 2
  • Land Act, No. 6 of 2012Section 80
  • Land Registration Act, No. 3 of 2012Section 28
  • Environment and Land Court ActSection 13(2)(d)
  • Matrimonial Property ActSection 12(1)
  • Civil Procedure ActSection 6

Cases cited (10)

  • Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others
    [2017] eKLR

    A charge is an interest in land securing repayment of money; its creation has nothing to do with use of land; power of sale disputes are commercial matters for the High Court

  • Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others
    [2012] eKLR

    A court's jurisdiction flows from the Constitution or legislation or both; it cannot arrogate to itself jurisdiction exceeding that conferred by law

  • Matter of Interim Independent Electoral Commissions
    Constitutional Application No. 2 of 2011 [2011] eKLR

    Where the Constitution exhaustively provides for a court's jurisdiction, it must operate within those limits and cannot expand jurisdiction through judicial craft or innovation

  • Republic v Karisa Chengo & 2 others
    SC Petition No. 5 of 2015 [2017] eKLR

    The High Court, ELC and ELRC are different and autonomous courts with different and distinct jurisdictions

  • P. J. Dave Flowers Limited v Limuru Hills Limited
    Malindi Civil Appeal No. 123 of 2019

    ELC jurisdiction where the litigant had an interest in the suit premises as a purchaser

  • Albert Chaurembo Mumba & 7 others v Maurice Munyao & 148 others
    [2019] eKLR

    Forum shopping is an injustice and an abuse of court process; parties must not choose fora in total disregard of constitutional jurisdictional limits

  • Stella Mokeira Matara v Thaddues Mose Mangenya & another
    [2016] eKLR
  • John Nduati Kariuki t/a Johester Merchants v National Bank of Kenya Limited
    [2006] eKLR
  • Geoffrey Mungai & another v Progressive Credit Limited
    [2018] eKLR
  • Joseph Siro Mosiona v HFCK & 3 others
    [2008] eKLR
On appeal from
Environment and Land Court at Mombasa
ELC Case No. 102 of 2019
Jurisdiction invoked
Article 164 of the Constitution (Court of Appeal appellate jurisdiction); appeal concerning jurisdiction of the ELC under Article 162(2)(b) and the Environment and Land Court Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (18)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Diamond Trust Bank Kenya Limited v FHH", Case Analysis (2022). Civil Appeal 18 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/769/eng@2022-06-24

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.