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ELCAllowedELC Case of 2017 (Mombasa)· [2018] KEELC 4152 (KLR)

Ideal Locations Limited v Nakumatt Holdings Limited & another [2018] KEELC 4152 (KLR)

Environment and Land Court
5 March 2018
CYC. Yano
4,035 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Plaintiff landlord sued the 1st Defendant tenant (Nakumatt Holdings Limited) and the 2nd Defendant guarantor for breach of a sub-lease dated 9th June 2014 over premises in the 'City Mall' building on LR 14407 and 16088, Mainland North, Mombasa, claiming arrears of Kshs.27,812,108.52, forfeiture and eviction. Simultaneously with the Plaintiff's Notice of Motion for summary judgment and leave under Section 561(4) of the Insolvency Act, the Defendants raised a preliminary objection contending the Court lacked jurisdiction because insolvency proceedings (Insolvency Petition No.10 of 2017, Nakumatt Holdings) were pending and an administrator had been appointed, and that the claim contravened Section 430 of the Insolvency Act. The Court held that the dispute, being one between landlord and tenant over non-payment of rent, relates to use and occupation of land, conferring jurisdiction on the ELC under Article 162(2)(b) of the Constitution and Section 13 of the Environment and Land Court Act, which must inform the reading of the Insolvency Act's definition of 'Court'. Peaceable re-entry was held not to fall within Section 430's prohibitions on execution against a company's assets. The preliminary objection was dismissed with costs. On the application, since the Defendants filed no defence and did not controvert the Plaintiff's affidavit evidence, no triable issue arose; the Court allowed the Notice of Motion dated 23rd November 2017 as prayed, delivering its ruling at Mombasa on 5th March 2018.

Key legal issues

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01

Jurisdiction of the ELC over landlord-tenant dispute involving a company in insolvency

Holding

The ELC has jurisdiction; the definition of 'Court' in the Insolvency Act must be read subject to Article 162(2)(b) and Section 13 of the ELC Act

Reasoning

The dispute is fundamentally about non-payment of rent and the landlord-tenant relationship, which relates to use and occupation of land under Article 162(2)(b) and Section 13(2)(a) of the ELC Act. Article 165(5)(b) ousts the High Court's jurisdiction over such matters. The Insolvency Act's definition of 'Court' must be interpreted in light of these constitutional provisions. The existence of a pending insolvency cause does not oust the ELC's jurisdiction.

p. 5
02

Whether the Plaintiff's claim contravenes Section 430 of the Insolvency Act

Holding

It does not; the Plaintiff is not executing against the company's assets

Reasoning

Section 430 prohibits execution and other actions against the assets of a company after presentation of a winding-up petition. The Plaintiff here is not undertaking attachment, sequestration, distress or execution; it seeks only forfeiture and peaceable re-entry under the lease. Peaceable re-entry is not among the prohibited actions, so the preliminary objection fails.

p. 5
03

Whether summary judgment should be entered

Holding

Yes; the Defendants filed no defence and raised no triable issue

Reasoning

The Defendants neither filed a defence nor responded to the Plaintiff's affidavit evidence, leaving the Plaintiff's claim for Kshs.27,812,108.52 in arrears uncontroverted. Applying the settled principles that a mere denial is insufficient and sham defences must be rejected, no triable issue was raised and summary judgment as prayed in the amended plaint was warranted.

p. 7

Legal principles established

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  • The ELC's jurisdiction under Article 162(2)(b) extends to landlord and tenant disputes over use and occupation of land notwithstanding pending insolvency proceedings against a party
  • A claim for peaceable re-entry by a landlord does not contravene Section 430 of the Insolvency Act

Court orders

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  1. 1.The Preliminary Objection by the Respondent is dismissed with costs to the Plaintiff
  2. 2.The Notice of Motion dated 23rd November 2017 is allowed as prayed

Authorities

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Legislation

  • Constitution of KenyaArticle 162(2)(b), 162(3), 165(5)
  • Environment and Land Court ActSection 4, 13
  • Insolvency ActSection 2, 430, 561(4)(e) and (f)
  • Civil Procedure RulesOrder 36 Rule 1, Section 1A

Cases cited (11)

  • Job Kilach –v- Nation Media Group Ltd & 2 Others
    (2015)eKLR
  • Fredrick Okoth Owino –v- T.S.S. Grain Millers
    (2017)eKLR
  • Daniel Chitwa Chegenye –v- Vihiga Clerk County Assembly and Another
    (2016)eKLR
  • Maganlal Motichand Chandaria & 6 Others –v- Paresh Kumar Dodhia
    (2017)eKLR
  • Aden Noor Ali –v- IEBC & 2 Others
    Nairobi HC Misc. Appl.No.533 of 2017
  • Owners of Motor Vessel "S"-v- Caltex Oil (K) Ltd
    (1989) KLR 1
  • Samuel Kamau Macharia & Another –v- Kenya Commercial Bank Ltd & 2 Others
    (2012) eKLR
  • Gupta –v- Continental Builders Ltd
    (1978)KLR 83
  • Giciem Construction Company –v- Amalgamated Trade & Services
    LLR No.103 (CAK)
  • Mugunga General Store –v- Pepco Distributors Ltd
    (1986) LLR 5111 (CAK)
  • Continental Butchery Ltd –v- Nthiwa
    (1989)KLR 573
Jurisdiction invoked
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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Cite this brief

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Cite this brief

Caselaw, "Ideal Locations Limited v Nakumatt Holdings Limited & another [2018] KEELC 4152 (KLR)", Case Analysis (2018). ELC Case of 2017 (Mombasa). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/4152/eng@2018-03-05

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