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ELCDismissed· [2017] KEELC 724 (KLR)

Nicholas Owino Rajula & another v Tourism Finance Cooperation [2017] KEELC 724 (KLR)

Environment and Land Court
15 November 2017
SKS.M. Kibunja
1,232 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Environment and Land Court confirmed it can hear disputes over charges on land, so borrowers can sue lenders there to stop property auctions.

What this practically means

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Executive summary

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The Plaintiffs, Nicholas Owino Rajula and Kogelo Hotel Ltd, sued Tourism Finance Corporation seeking an injunction, taking of accounts and a declaration, after the Defendant advertised the two parcels of land (North Sakwa/Nyawita/2186 and East Alego/Kogelo Nyangoma/1064) charged to secure financial facilities, for auction on 14th December 2016. The Defendant filed a preliminary objection contending that the Environment and Land Court lacked jurisdiction because the dispute concerned a legal charge over land, which counsel argued had been converted into mere collateral, a commercial rather than a land matter. The court framed two issues: its own jurisdiction and the costs of the objection. Noting conflicting superior court authorities on whether charge disputes are commercial or land matters, the court held that Section 13(2)(d) and (e) of the Environment and Land Court Act covers contracts and instruments granting enforceable interests in land, that charge documents are essentially contracts attaching to land, and that Section 150 of the Land Act and Section 101 of the Land Registration Act expressly vest jurisdiction over such disputes in this court, the legislation postdating the Constitution's creation of the court under Article 162(2)(b). Applying MV Lilian 'S' v Caltex Oil Kenya Ltd, the court treated the jurisdictional question as decisive. The preliminary objection was dismissed with costs, leaving the suit and the notice of motion to proceed on the merits.

Key legal issues

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01

Jurisdiction of the Environment and Land Court over disputes arising from legal charges over land

Holding

The court has jurisdiction. Charge documents are contracts that attach to land, and realization of charged property is governed by Part VII of the Land Act, whose Section 150 together with Section 101 of the Land Registration Act vests jurisdiction in this court.

Reasoning

The court acknowledged conflicting superior court decisions: some treating charge disputes as commercial matters for the High Court, others relating them to title and land. It read Section 13(2)(d) and (e) of the Environment and Land Court Act to cover contracts and instruments granting enforceable interests in land. Because the Land Act and Land Registration Act postdate the constitutional creation of the court, their express conferral of jurisdiction was held to remove any doubt; had Parliament intended charges disputes to stay in the High Court, it would have said so.

p. 2
02

Effect of a finding of no jurisdiction

Holding

Jurisdiction is foundational; without it the court must down its tools immediately.

Reasoning

Relying on MV Lilian 'S' v Caltex Oil Kenya Ltd, the court agreed with both counsel that the jurisdictional question was of paramount importance, since a finding of no jurisdiction would end the matter at the threshold regardless of the merits of the injunction application.

p. 2

Legal principles established

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  • Disputes on the rights and obligations arising out of legal charges over land fall within the jurisdiction of the Environment and Land Court under Section 13(2)(d) and (e) of the Environment and Land Court Act and Section 150 of the Land Act

Court orders

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  1. 1.The Defendant's preliminary objection on jurisdiction is dismissed
  2. 2.Costs of the preliminary objection awarded to the Plaintiffs

Authorities

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Legislation

  • Constitution of Kenya 2010Article 162(2)(b)
  • Constitution of Kenya 2010Article 165(3)(a)
  • Environment and Land Court Act No. 19 of 2011Section 13, including 13(2)(d) and (e)
  • Land Act No. 6 of 2012Section 150; Part VII
  • Land Registration Act No. 3 of 2012Section 101

Cases cited (6)

  • Al-Jalal Enterprise's Limited v Gulf African Bank Limited
    [2014] eKLR
  • Ester Nyanganyi Onyango v Housing Finance Company of Kenya and Another
    [2016] eKLR
  • Kisimani Holdings Limited & Another v Fidelity Bank Limited
    [2013] eKLR
  • John Kimani Njenga v Margaret Wanjiru Kanyiri & 2 Others
    [2015] eKLR
  • Ernest Kevin Luchidio v Attorney General & 2 Others
    [2015] eKLR
  • MV Lilian "S" v Caltex Oil Kenya Ltd
    [1989] KLR at page 14
Jurisdiction invoked
Article 162(2)(b) of the Constitution 2010 and Section 13 of the Environment and Land Court Act No. 19 of 2011

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Nicholas Owino Rajula & another v Tourism Finance Cooperation [2017] KEELC 724 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/724/eng@2017-11-15

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