Virunga Limited & another v Navin Premji Kerai (Sued in his own name & in his capacity as a Co-administrator of the Estate of Sapna Kanji Patel) & another [2021] KEELC 4315 (KLR)
The bottom line
#The Environment and Land Court ruled that a broadly worded arbitration clause and consent order gave the arbitrator full power to decide who owns the disputed Nairobi apartments.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the arbitrator had jurisdiction to determine whether the Apartments belonged to or were registered in the name of Kanji Kunverji Patel at the time of transfer
- 2.Whether the arbitrator had jurisdiction to determine whether the Apartments were transferred to the 1st Respondent and the late Sapna Patel
- 3.Whether the arbitrator had jurisdiction to determine whether the transfer of the Apartments was in the form of a gift
- 4.Whether the arbitrator had jurisdiction to receive, admit or act on evidence submitted to prove questions outside her jurisdiction or barred by law
Key legal issues
#Scope of the arbitrator's jurisdiction under clause 4.4 and the consent order
The arbitrator has jurisdiction to determine all questions relating to ownership of the Apartments including the circumstances in which the leases were entered into
Clause 4.4 referred all disputes and questions touching the lease or its construction or application to arbitration. The consent order of 20/12/2018 recorded before the Court of Appeal referred all issues relating to ownership of the suit property and income arising from it to the arbitrator in very general terms. Together these clothed the arbitrator with jurisdiction to hear evidence on the circumstances surrounding execution of the leases, whether consideration was paid or the transfer was a gift.
Admissibility of extrinsic evidence on the gift thesis
The arbitrator was entitled to receive and act on evidence of the circumstances surrounding the execution of the leases
The Applicants themselves pleaded non-payment of the purchase price despite the leases reciting that consideration was received, so they could not insist on strict construction only against the Respondents. Selective admission of extrinsic evidence would not aid a fair and just determination. The arbitrator did not rewrite the contract nor deal with unrelated matters.
Failure of the arbitrator to determine the interim measure on rental income
The court did not find this to vitiate the preliminary award on jurisdiction
Although the Applicants faulted the arbitrator for not determining their prayer for preservation of rental income, the court's determination focused on jurisdiction and did not disturb Award Number 1. The Originating Summons was dismissed with costs to the Respondents.
Legal principles established
#- An arbitration clause in general terms and a consent order referring all issues relating to ownership of property confer jurisdiction on the arbitrator to determine all disputes touching the construction and application of the lease including the rights and liabilities of the parties
- A party cannot selectively admit extrinsic evidence favouring its own claim while demanding strict construction against the other party
Court orders
#- 1.The arbitrator appointed to arbitrate the dispute has jurisdiction to determine the questions framed by the Applicants in the Originating Summons dated 28/2/2020 and to receive, admit or act on evidence submitted for purposes of proving those questions
- 2.The orders sought in the Originating Summons dated 28/2/2020 are declined
- 3.The Applicants to pay the Respondents the costs of the suit
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court under the Arbitration Act; dispute referred to arbitration by consent order of the Court of Appeal in Civil Application No. 208 of 2018 (UR230/2018)
Relief refused
#Declaration that the arbitrator lacked jurisdiction over questions of ownership, transfer and gift of the Apartments
The arbitration clause and the consent order before the Court of Appeal clothed the arbitrator with jurisdiction over all disputes relating to ownership
Declaration that the arbitrator lacked jurisdiction to receive or act on evidence on those questions
Evidence as to how the lessees came to be registered must be adduced and analysed for a conclusive determination
Declaration that the arbitrator lacked jurisdiction to compel Kanji Kunverji Patel to gift the Apartments
Falls within the general terms of the consent reference to arbitration
Costs
The Applicants will pay the Respondents the costs of the suit.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The court finds that the arbitrator appointed to arbitrate on the dispute between the Applicants and the Respondents relating to the Apartments has jurisdiction to determine the questions framed by the Applicants in the Originating Summons dated 28/2/2020; and to receive, admit or act on evidence submitted by the parties for purposes of proving the questions framed by the Applicants in the Originating Summons.
The court declines to grant the orders sought in the Originating Summons dated 28/2/2020. The Applicants will pay the Respondents the costs of the suit.
In the court’s view the arbitration clause in the leases over the Apartments and the order recorded by the parties in the Court of Appeal clothed the arbitrator with the jurisdiction to hear and determine all disputes and questions arising between the Applicants and the Respondents touching on the construction and application of the clauses of the leases including the rights and liabilities of the parties to the lease.
Issues in the judgment
#The court's ruling and orders do not expressly address the Applicants' pleaded res judicata objection in reverse or the 2nd Respondent's capacity (a deceased person's estate), nor does the judgment clearly state the case number of the Originating Summons, only its date
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Virunga Limited & another v Navin Premji Kerai (Sued in his own name & in his capacity as a Co-administrator of the Estate of Sapna Kanji Patel) & another [2021] KEELC 4315 (KLR)", Case Analysis (2021). Not stated in the judgment (Originating Summons dated 28/2/2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/4315/eng@2021-02-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.