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ELCPartially AllowedNot stated in judgment (plaint filed 6 August 2020)· [2021] KEELC 4070 (KLR)

Harun Cheboi & another v Registered Trustees of Kenya Ports Authority Pension Scheme [2021] KEELC 4070 (KLR)

Environment and Land Court of Kenya
3 March 2021
MSMunyao Sila
1,772 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 blocked the sale of pension scheme houses after trustees failed to prove the sale was genuine or that disputes must go to arbitration.

What this practically means

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Executive summary

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The plaintiffs, employees of Kenya Ports Authority and members of the Kenya Ports Authority Pension Scheme, reside as tenants in houses owned by the Scheme, namely LR No. 209/10530/86 and LR No. 209/10530/89 (houses 18 and 21, Saika Estate, Nairobi). After the Scheme floated a tender in October 2019 to offload properties to comply with Retirement Benefits Authority regulatory terms, the plaintiffs sued claiming a legitimate expectation of a right of first purchase and that the properties were sold at an undervalue or not properly sold. They sought an injunction and an order affording them an opportunity to purchase their units under a tenant purchase scheme. Alongside the plaint they sought interlocutory injunction. The defendant opposed, asserting an open-tender sale to Kijiji Park Limited by agreement dated 7 July 2020, and filed a preliminary objection invoking Clause 34 of the Trust Deed (arbitration), Section 6 of the Arbitration Act, and a defect in summons. The court dismissed the preliminary objection because the defendant never produced the Trust Deed and Rules, and held the summons issue spent since a defence had been filed. On the injunction, the court found only one purported sale agreement, imperfectly attested, no evidence of payment, and a transfer instrument referring to a different entity and property; LR No. 209/10530/89 appeared unsold. The plaintiffs were held to have a prima facie case with a probability of success. The application was allowed, status quo before the purported sales was to be maintained, and the plaintiffs received costs of the application and preliminary objection. The suit itself proceeds to hearing.

Key legal issues

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01

Preliminary objection seeking reference to arbitration under the Trust Deed

Holding

Dismissed because the Trust Deed and Rules were never produced to the court

Reasoning

The defendant anchored its preliminary objection on Clause 34 of the Trust Deed and Rules providing for arbitration, and on Section 6 of the Arbitration Act. However, the defendant failed to annex the Trust Deed to its replying affidavit or list of documents, so the court could not verify the arbitration clause and declined to allow the objection, leaving liberty to file a formal application for reference to arbitration.

p. 2
02

Striking out the suit for defect in summons to enter appearance

Holding

Rejected; the purpose of summons was spent as a defence had already been filed

Reasoning

The court held that summons serve to inform a defendant of a suit and the time to enter appearance or file defence. Since the defendant had already filed a Statement of Defence, no prejudice arose from any defect in summons and striking out the suit was unwarranted.

p. 2
03

Whether an injunction should issue pending hearing of the suit

Holding

Yes; the plaintiffs established a prima facie case with a probability of success, and irreparable loss and balance of convenience favour maintaining the status quo

Reasoning

The defendant only produced a sale agreement over one of the two suit properties; that agreement was not properly attested, no payment was evidenced, and the transfer instrument annexed related to a different entity and property. LR No. 209/10530/89 appeared unsold. Given the defendant's vagueness, the plaintiffs' legitimate expectation as Scheme members and occupation of the houses, an injunction and maintenance of the status quo were warranted.

p. 2

Legal principles established

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  • A party relying on an arbitration clause in a document must place that document before the court; without it the court cannot compel arbitration
  • Where a defence has already been filed, the purpose of summons to enter appearance is spent and a suit cannot be struck out for defects in the summons
  • Where a party alleging a sale fails to demonstrate that the property was sold or properly sold, the party in occupation claiming a legitimate expectation establishes a prima facie case for injunction

Court orders

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  1. 1.The preliminary objection is dismissed with costs
  2. 2.The plaintiffs' application for injunction is allowed as drawn
  3. 3.The status quo prevailing before the purported sales be maintained
  4. 4.The plaintiffs will have the costs of the application and of the preliminary objection

Authorities

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Legislation

  • Arbitration ActSection 6
Jurisdiction invoked
Original civil suit instituted by plaint before the Environment and Land Court (specific provision not stated in the judgment)

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, "Harun Cheboi & another v Registered Trustees of Kenya Ports Authority Pension Scheme [2021] KEELC 4070 (KLR)", Case Analysis (2021). Not stated in judgment (plaint filed 6 August 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/4070/eng@2021-03-03

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