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Court of AppealPartially AllowedCivil Appeal at Mombasa (appellate decision on ELC Case No 51 of 2022)· [2024] KECA 410 (KLR)

Bank of Africa Kenya Limited & another v TSS Investment Limited & 2 others (Civil Appeal E055 of 2022) [2024] KECA 410 (KLR)

Court of Appeal of Kenya
26 April 2024
AMA. K. MurgorKLDr. K. I. LaibutaGOG. V. Odunga
5,851 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that tenants cannot sue to stop a bank from selling a charged property, and mortgage disputes belong in the High Court, not the Land Court.

What this practically means

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Executive summary

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The bank, having charged LR Nos. Mombasa/Block XXI/526 and 527 by TSS Investment Limited to secure a loan, instructed auctioneers to sell the properties by public auction after default. The 1st and 2nd respondents, claiming to be long-term tenants operating a car bazaar on the suit properties, sued for an injunction in the ELC at Mombasa, alleging they were not served with the statutory notices. The ELC (Naikuni, J) dismissed the appellants' preliminary objection and, the motion being unopposed, granted the injunction. On appeal, the Court of Appeal (Murgor, Laibuta and Odunga, JJA) framed three issues. First, it held that the ELC had no jurisdiction: following Co-operative Bank v Patrick Kangethe Njuguna, disputes over charges and the enforcement of a chargee's statutory power of sale fall within the High Court's civil jurisdiction, not the ELC's mandate over use and occupation of, and title to, land. Second, the tenants had no locus standi: they had no interest under the charge and did not fall within the amended section 103(1) of the Land Act, the lessee category having been deleted by the Land Laws (Amendment) Act, 2016; only a chargor, or a consenting spouse, may complain. Third, the suit was res judicata, multiple prior proceedings between the bank and parties claiming under the same title having determined the same issues with finality. The Court allowed the appeal with costs to the appellants, effectively setting aside the injunction and affirming the principle of stare decisis against subordinate court defiance.

Key legal issues

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01

Whether the ELC had jurisdiction over a suit challenging a chargee's exercise of statutory power of sale

Holding

The ELC had no jurisdiction; the dispute concerned enforcement of a charge, not use and occupation of, or title to, land.

Reasoning

Section 13 of the ELC Act limits the court's jurisdiction to environment and the use and occupation of, and title to, land. Relying on Co-operative Bank v Patrick Kangethe Njuguna, a charge is a disposition securing repayment, distinct from land use; contracts within ELC jurisdiction must be incidental to land use, excluding mortgages and charges. The dominant issue was the bank's exercise of its statutory power of sale, which lies in the High Court's civil jurisdiction.

p. 9
02

Whether tenants of the chargor have locus standi to challenge the chargee's power of sale

Holding

They do not; only the chargor and the persons enumerated in section 103(1) of the Land Act may apply for relief.

Reasoning

The validity of the respondents' claim depended on their interest in the suit properties. They had no contractual or legal right under the charge, and did not fall within section 103(1) as amended - the category of lessees having been deleted in 2016. Section 96(3) protects only a consenting spouse; section 24 of the Land Registration Act gives them no recognised right. Nairobi Mamba Village and Venture Capital confirm only a chargor with proprietary interest may complain.

p. 14
03

Whether the suit was res judicata

Holding

Yes; the same issues had been determined with finality by the High Court, the ELC and the Court of Appeal in multiple prior proceedings.

Reasoning

Applying John Florence Maritime Services and IEBC v Maina Kiai, the elements of res judicata were satisfied: prior judgments final and on the merits by competent courts, over the same subject matter and cause of action. It matters not that the respondents were not parties to those suits; they litigated under the same title. The impugned ruling purported to reverse binding decisions of this Court, contrary to stare decisis as stated in Mwai Kibaki v Daniel Toroitich Arap Moi.

p. 3

Legal principles established

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  • The ELC's jurisdiction is confined to disputes relating to the environment and the use and occupation of, and title to, land; disputes over mortgages and charges (including enforcement of statutory power of sale) fall within the civil jurisdiction of the High Court.
  • Tenants, licensees or other third parties claiming under the chargor have no locus standi to challenge or restrain a chargee's exercise of its statutory power of sale; after service of the statutory notice on the chargor, the chargee owes no notice obligation to such third parties.
  • Section 103(1)(d) of the Land Act, which had allowed lessees to seek relief against a chargee, was deleted by the Land Laws (Amendment) Act, 2016, restoring the restricted class of applicants.
  • Lower courts have no power to overrule or flout the decisions of the Court of Appeal; they must follow them unless distinguishable.

Court orders

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  1. 1.The appeal is allowed
  2. 2.Costs of the appeal to the appellants

Authorities

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Legislation

  • Land Actsection 90(1), 90(3), 96, 96(3), 103(1) and (2), 150, 87
  • Land Registration Actsection 24, 25(1)(a), 59
  • Environment and Land Court Actsection 13
  • Land Laws (Amendment) Actsection 75 (Act No 28 of 2016)
  • Court of Appeal Rules, 2022rule 88
  • Constitution of Kenya, 2010Article 162(2) & (3), 162(2)(b)

Cases cited (21)

  • Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others
    [2017] eKLR
  • Joel Kyatha Mbaluka t/a Mbaluka & Associates Advocates v Daniel Ochieng Ogola t/a Ogola Okello & Co Advocates
    [2019] eKLR
  • Alfred Njau & 5 others v City Council of Nairobi
    [1983] eKLR
  • Nairobi Mamba Village v National Bank of Kenya
    [2002] 1 EA 197
  • Venture Capital and Credit Ltd v Consolidated Bank of Kenya Ltd
    [2004] 1 EA 357
  • Executive Curtains & Furnishers Limited v Family Finance Building Society
    [2007] eKLR
  • Tazmin Shaffique Allibhai v Shaffique Allibhai & I&M Bank Limited
    [2020] eKLR
  • John Florence Maritime Services Limited & another v Cabinet Secretary Transport & Infrastructure & 3 others
    [2021] KESC 39 (KLR)
  • Uhuru Highway Developers Limited v Central Bank of Kenya & others
    [1999] eKLR
  • Nicholas Njeru v Attorney General & 8 others
    Civil Appeal 110 of 2011 (2013) eKLR
  • Independent Electoral & Boundaries Commission v Maina Kiai & 5 others
    [2017] eKLR
  • Gladys Nduku Nthuki v Letshego Kenya Limited; Mueni Charles Maingi (Intended Plaintiff)
    [2022] eKLR
  • Juja Coffee Exporters Limited & 3 others v Bank of Africa Limited & 4 others
    Mombasa HCCC No 57 of 2016, ruling January 25, 2022
  • Bank of Africa v Juja Coffee Exporters Limited & 4 others (consolidated with TSS Transporters Limited & 2 others v Bank of Africa Limited & another)
    Mombasa Civil Appeal No 99 of 2016 / Civil Appeal No 109 of 2016, judgment January 25, 2018
  • Bank of Africa Limited v Juja Coffee Exporters Limited & 4 others
    [2018] eKLR
  • Osman Tahir Sheikh Said & 2 others v Bank of Africa Limited
    Mombasa HCC No 80 of 2018, ruling October 7, 2018
  • Juja Coffee Exporters Limited & 2 others v Bank of Africa Limited & another
    Mombasa Civil Appeal No 158 of 2018 (UR), judgment June 18, 2021
  • Osman Tahir Sheikh Said & 2 others v Bank of Africa Limited
    Mombasa HCC No 86 of 2019 (UR), ruling November 15, 2019
  • Tahir Sheikh Investments Limited v Bank of Africa Limited
    [2020] eKLR
  • Mwai Kibaki v Daniel Toroitich Arap Moi
    [1999] eKLR
  • Margaret Muthoni Njoroge
On appeal from
Environment and Land Court at Mombasa
ELC Case No 51 of 2022
Jurisdiction invoked
Appellate jurisdiction of the Court of Appeal (second appeal from the ELC); underlying jurisdictional framework in Article 162(2)(b) of the Constitution and section 13 of 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 (25)

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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, "Bank of Africa Kenya Limited & another v TSS Investment Limited & 2 others (Civil Appeal E055 of 2022) [2024] KECA 410 (KLR)", Case Analysis (2024). Civil Appeal at Mombasa (appellate decision on ELC Case No 51 of 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/410/eng@2024-04-26

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