Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
ELCDismissedELC Civil Suit (plaint dated 3rd October 2012, filed 10th October 2012)· [2016] KEELC 234 (KLR)

Agro Chem Housing Co-operative Society v Lake Holdings (Kenya) Limited [2016] KEELC 234 (KLR)

Environment and Land Court
9 November 2016
1,907 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

#

A Kenyan court ruled that a co-operative could sue a developer despite an arbitration clause, because the land sale agreements at issue fell outside that clause.

What this practically means

#

Executive summary

#
The Defendant, Lake Holdings (Kenya) Limited, raised a preliminary objection against a suit brought by the Plaintiff society, on three grounds: that the court lacked jurisdiction because the memorandum of understanding between the parties contained an arbitration clause, that the suit was statute barred under the Limitation of Actions Act, and that the Plaintiff lacked locus standi to sue on sale agreements executed by individual members. Written submissions were filed by both counsel. The court framed three issues: jurisdiction, limitation and locus standi. On jurisdiction, it held that the memorandum of 17th May 2005 was a framework document rather than a sale agreement, and that the suit was founded on the sale agreements of 6th August 2009 between the Defendant and the Plaintiff and some members; the arbitration clause therefore did not apply, and the dispute over contracts relating to land fell within Section 13(2)(d) of the Environment and Land Court Act. On limitation, the suit filed on 10th October 2012 was about three years and two months from the sale agreements, within the six-year period under Section 4(1). On locus standi, the Plaintiff was a body corporate under Section 12 of the Co-operative Societies Act, was itself a party to the sale agreements in respect of five plots, and had its members' resolution of 31st July 2012 authorizing the suit; Order 1 rule 8(1) permitted it to sue representatively and Order 1 rule 9 cured any misjoinder. The preliminary objection was dismissed with costs on 9th November 2016.

Key legal issues

#
01

Jurisdiction in view of the arbitration clause in the memorandum of understanding

Holding

The court has jurisdiction because the suit is based on the sale agreements of 6th August 2009, not solely on the memorandum containing the arbitration clause.

Reasoning

The memorandum of 17th May 2005 was not itself a sale agreement but a framework document on plot sizes, price and repayment terms. Its clause 1.8 bound only the parties who signed it. Since the suit is founded on the 2009 sale agreements between the Defendant and the Plaintiff and some members, the arbitration clause does not apply and Section 13(2)(d) of the ELC Act confers jurisdiction over disputes arising from contracts relating to land.

p. 3
02

Whether the suit is statute barred

Holding

The suit is not statute barred as it was filed about three years, two months and three days from the date of the sale agreements, within the six-year period.

Reasoning

Limitation runs from the agreements on which the suit is based. The sale agreements are dated 6th August 2009 and the suit was filed on 10th October 2012, well within the six years prescribed by Section 4(1) of the Limitation of Actions Act for contract claims, and also within the twelve-year period under Section 7 for recovery of land.

p. 3
03

Whether the Plaintiff has locus standi

Holding

The Plaintiff, a body corporate under the Co-operative Societies Act, has locus standi both in its own name and on behalf of its members under Order 1 rule 8(1).

Reasoning

The Plaintiff negotiated the memorandum on behalf of itself and its members and facilitated payments under clause 1.5. Its members passed a resolution on 31st July 2012 authorizing the suit. The plaint names 24 parties including the Plaintiff itself in respect of specific plots, and as a body corporate under Section 12 of the Co-operative Societies Act it has capacity to sue. Order 1 rule 9 cures any misjoinder or non-joinder.

p. 4

Legal principles established

#
  • Where a suit is based not solely on an agreement containing an arbitration clause but on subsequent sale agreements, the arbitration clause in the earlier memorandum does not oust the court's jurisdiction.
  • A suit founded on contracts for sale of land falls within the jurisdiction of the Environment and Land Court under Section 13(2)(d) of the Environment and Land Court Act.
  • A co-operative society with capacity to sue may represent its members under Order 1 rule 8(1) of the Civil Procedure Rules where they share the same interest.

Court orders

#
  1. 1.The preliminary objection raised by the Defendant to the Plaintiff's suit has no merit and is dismissed with costs.

Authorities

#

Legislation

  • Arbitration Act(generally, per clause 1.8 of the memorandum)
  • Limitation of Actions Act Chapter 22 Laws of KenyaSection 4(1); Section 7
  • Environment and Land Court Act No.19 of 2011Section 13(2)(d)
  • Co-operative Societies Act Chapter 409 Laws of KenyaSection 12
  • Civil Procedure RulesOrder 1 rule 8(1); Order 1 rule 9

Cases cited (4)

  • Owners of the Motor Vessel "Lilian" -V- Caltex Oil (Kenya) Ltd
    [1989] KLR 1
  • Babu Omar & Others -V- Edward Mwiraria & Another
    Mombasa H.C.C.C. No.1 of 1996
  • Mukisa Biscuits Company Ltd -V- Westend Distributors Limited
    [1969] E.A. 696
  • Daniel Lwambi & 2 Others -V- Penguni Holdings Limited
    ELC Civil Appeal No.41 of 2012
Jurisdiction invoked
Section 13(2)(d) of the Environment and Land Court Act No.19 of 2011

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Agro Chem Housing Co-operative Society v Lake Holdings (Kenya) Limited [2016] KEELC 234 (KLR)", Case Analysis (2016). ELC Civil Suit (plaint dated 3rd October 2012, filed 10th October 2012). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2016/234/eng@2016-11-09

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