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ELCDismissedNot stated in the ruling· [2021] KEELC 934 (KLR)

Hadiko Company Limited & another v I & M Bank Limited & 5 others [2021] KEELC 934 (KLR)

Environment and Land Court
15 November 2021
1,977 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 refused to throw out a land suit over missing company board authority, confirming such proceedings can be fixed later.

What this practically means

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Executive summary

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This Environment and Land Court ruling at Machakos, delivered virtually on 15th November 2021 by Christine Ochieng, Judge, determined a Notice of Preliminary Objection dated 22nd February 2021 raised by the 2nd Defendant on two grounds: that the Plaintiff lacked locus standi and that the court lacked jurisdiction. The 2nd Defendant argued that the dispute concerned the internal affairs of the 1st Plaintiff company and was a derivative action under Section 238 of the Companies Act; that the 2nd Plaintiff had no written authority, board resolution, or duly authorized Verifying Affidavit; and that the suit should be dismissed. The Plaintiffs countered that the objection mixed fact and law, that issues of management and resolutions were matters for trial, that unauthorized proceedings may be ratified, and that the prior suit, HCCC 270 of 2016 (Milimani Commercial), was withdrawn by consent. The court treated jurisdiction and locus standi jointly, citing Nigerian and Kenyan authority on the centrality of jurisdiction and the meaning of locus standi. It found that the claim's fulcrum was a land dispute between the company's only two directors, one of whom transferred the land to the 4th Defendant without disclosing any company resolution. The objection, raised after the hearing commenced and requiring viva voce evidence, was held mischievous and draconian. The court followed Assia Pharmaceuticals on ratification and dismissed the objection, with costs in the cause.

Key legal issues

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01

Whether the 2nd Plaintiff had locus standi to institute the suit on behalf of the 1st Plaintiff company without a board resolution

Holding

The Preliminary Objection on locus standi failed because it depended on facts requiring trial evidence, and unauthorized proceedings may be ratified later

Reasoning

The court noted the dispute concerns land involving two directors of one company, one of whom transferred the land without disclosing any company resolution. The 2nd Plaintiff claimed she funded the acquisition and would suffer irreparable loss. The objection was raised after hearing commenced and did not particularize points of pure law; the court associated itself with authority that unauthorized proceedings can be ratified.

p. 3
02

Whether the ELC had jurisdiction over the dispute

Holding

The court found jurisdiction existed as the fulcrum of the claim was a dispute over land, within the court's mandate

Reasoning

The court observed that the claim revolved around a land dispute involving the only two directors of a company, with one director disposing of the land to a third party. The 2nd Defendant, claiming to be a director, did not show he obtained a company resolution when disposing of the land. The land dispute fell within the Land Act 2012 and Land Registration Act 2012 as pleaded.

p. 2
03

Whether the Preliminary Objection was properly founded on points of law

Holding

The objection was ambiguous and required ascertainment of facts beyond the pleadings, so it was defective

Reasoning

The court found the 2nd Defendant mischievously raised the objection after the hearing commenced, had not particularized the points of law, and sought to block the 2nd Plaintiff from being heard contrary to her right to be heard. Upholding it would require viva voce evidence on substantive issues.

p. 3

Legal principles established

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  • Proceedings commenced without proper authority may subsequently be ratified and are not fatal to the suit
  • Jurisdiction is fundamental and must be addressed first where raised

Court orders

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  1. 1.The Notice of Preliminary Objection dated 22nd February, 2021 is dismissed
  2. 2.Costs will be in the cause

Authorities

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Legislation

  • Constitution of Kenya 2010Articles 3, 22, 258, 70, 165
  • Land Act
  • Land Registration Act
  • Companies ActSection 238
  • Civil Procedure RulesOrder 4 Rule 1(3) & (4)

Cases cited (14)

  • The owners of Motor Vessel "Lilian S" v Caltex Oil Kenya Limited
    (1989) KLR
  • Tavuli Clearing & Forwarding Limited v Charles Kalujje Lwanga
    Nairobi (Milimani) HCCC No. 585 of 2004
  • Independent Electoral and Boundaries Commission v Maina Kiai & 5 others
    Nairobi CA Civil Appeal No. 105 of 2017 eKLR
  • Assia Pharmaceuticals v Nairobi Veterinary Centre Ltd.
    Nairobi (Milimani) HCCC No. 391 of 2000
  • Leo Investments Ltd v Trident Insurance Company Limited
    [2014] eKLR
  • Hon. (Lady) Justice Kalpana H. Rawal vs. Judicial Service Commission & Others
    Supreme Court of Kenya Civil Application No. 11 of 2016
  • Ocheja Emmanuel Dangana vs. Hon. Atai Aidoko Aliusman & 4 Others
    Supreme Court of Nigeria Supreme Case No. 11 of 2012
  • Kakuta Maimai Hamisi vs. Peris Pesi Tobiko & 2 Others
    (2013) eKLR
  • Mumo Matemu vs. Trusted Society of Human Rights Alliances & 5 Others
    (2014) eKLR
  • Alfred Njau and Others vs. City Council of Nairobi
    (1982) KAR 229
  • Bashir Haji Abdullahi v Adan Mohammed Nooru & 3 others
    [2004] eKLR
  • Quick Enterprises Ltd vs. Kenya Railways Corporation
    Kisumu High Court Civil Case No.22 of 1999
  • Wilmot Mwadilo, Edwin Mwakaya, Amos Nyatta & Patrick Mbinga vs. Eliud Timothy Mwamunga & Sagalla Ranchers Limited
    [2017] eKLR
  • Law Society of Kenya vs. Commissioner of Lands & Others
    Nakuru High Court Civil Case No.464 of 2000
Jurisdiction invoked
Articles 70 and 165 of the Constitution of Kenya 2010, and the Land Act 2012 and Land Registration Act 2012 (as contended by the Plaintiffs)

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, "Hadiko Company Limited & another v I & M Bank Limited & 5 others [2021] KEELC 934 (KLR)", Case Analysis (2021). Not stated in the ruling. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/934/eng@2021-11-15

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