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ELCStruck OutNot stated in judgment (plaint dated 23rd May, 2017)· [2018] KEELC 4005 (KLR)

Charity Wangui Ngumo v Chase Bank Limited (In Receivership) & Antique Actions Agencies [2018] KEELC 4005 (KLR)

Environment and Land Court
14 March 2018
LWL N Waithaka
1,668 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court struck out a land suit against a bank under receivership because the plaintiff did not first get the court's permission.

What this practically means

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Executive summary

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The plaintiff sued for a declaration that a charge dated 12th August 2014 over land Title Magutu/Gatei/438 between her and the 1st defendant was null and void, plus a permanent injunction, filing a contemporaneous notice of motion; interim orders were granted by consent on 9th November 2017. The defendants raised a preliminary objection that the suit and application were fatally defective for failure to obtain leave to commence proceedings against a company under receivership, contrary to Section 56(2) of the Kenya Deposit Insurance Act, 2012, the 1st defendant having been placed under receivership by the Central Bank of Kenya effective 7th April 2016. The plaintiff argued that the ELC Act required no leave; that Section 56(2) could not fetter the court's jurisdiction or her constitutional property rights; and, relying on Ashok L. Doshi, that leave is unnecessary for a bank under receivership rather than liquidation. Applying the Mukisa Biscuit test, Waithaka J found the objection a pure point of law on undisputed facts. The court held Section 56(2) is couched in mandatory terms, applies to an 'institution' including a bank under receivership, and followed the three authorities relied on by the defendants, rejecting the plaintiff's submissions. The preliminary objection was allowed; the notice of motion and the suit as against the 1st defendant were struck out with costs.

Key legal issues

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01

Whether the objection is a proper preliminary objection

Holding

It is a pure point of law; the facts (receivership and non-obtaining of leave) were undisputed

Reasoning

Applying the Mukisa Biscuit test, the court noted that the 1st defendant's placement under receivership and the plaintiff's failure to seek leave were not disputed, so the objection raised a pure point of law with no facts to ascertain and no exercise of discretion.

p. 2
02

Whether Section 56(2) KDIA applies to receivership, not only liquidation

Holding

Yes; 'institution' under the Act covers a bank under receivership, and leave is mandatory

Reasoning

The court adopted the reasoning of Nzioka J in Andrew Gikuni Muchai: receivership is a preservation process; Section 56(2) is couched in mandatory terms; the definition of 'institution' in Section 2 covers banks, whether or not in liquidation. Leave prevents a floodgate of suits during a moratorium. Similar holdings by Wasilwa J and Mbogholi J were endorsed.

p. 2

Legal principles established

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  • Leave of the court is mandatory before commencing civil proceedings against an institution under receivership under Section 56(2) of the Kenya Deposit Insurance Act, 2012
  • A suit filed without the required statutory leave is incompetent and cannot sustain any interlocutory or substantive prayers

Court orders

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  1. 1.The preliminary objection is allowed
  2. 2.The notice of motion and the suit are struck out as against the 1st defendant
  3. 3.Costs to the 1st defendant

Authorities

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Legislation

  • Kenya Deposit Insurance ActSection 56(2)
  • Kenya Deposit Insurance ActSections 43(1) and (2)
  • Kenya Deposit Insurance ActSection 53(1)
  • Kenya Deposit Insurance ActSection 2 (definition of 'institution')
  • Kenya Deposit Insurance ActPart IV
  • Environment and Land Court Actnull
  • Banking Actnull (referred to in definition of institution)

Cases cited (5)

  • Andrew Gikuni Muchai -vs- Chase Bank Ltd & another
    High Court Civil Suit No. 241 of 2016 (unreported)
  • George Mureithi and others -vs- Kenatco Taxis Limited (In Receivership)
    (2016) eKLR
  • Amos Peter Omusotsi -vs- Bulleys Tanneries (under receivership) & another
    (2016) eKLR
  • Ashok L. Doshi and another -vs- Central Bank of Kenya and another
    (2016) eKLR
  • Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd
    (1969) EA 696
Jurisdiction invoked
Environment and Land Court Act, 2012 - original jurisdiction over land disputes

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (7)

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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, "Charity Wangui Ngumo v Chase Bank Limited (In Receivership) & Antique Actions Agencies [2018] KEELC 4005 (KLR)", Case Analysis (2018). Not stated in judgment (plaint dated 23rd May, 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/4005/eng@2018-03-14

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