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ELCDismissed· [2022] KEELC 555 (KLR)

Joyce Nancy Kabiru v Faulu Micro-Finance Bank Limited & 2 others [2022] KEELC 555 (KLR)

Environment and Land Court
11 March 2022
ECE.C. Cherono
1,962 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 confirmed it can hear cases challenging bank auctions of charged land, dismissing an attempt to throw out a borrower's suit.

What this practically means

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Executive summary

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The 3rd Defendant filed a Notice of Preliminary Objection dated 26th November 2019 contending that the Environment and Land Court lacked jurisdiction to hear the Plaintiff's suit, relying on the Court of Appeal decision in Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others, arguing that the dispute was a commercial transaction concerning loan accounts and statutory notices rather than a matter under Section 13 of the Environment and Land Court Act. The parties agreed the objection be disposed of by written submissions. The Plaintiff, whose suit concerns land parcel Mwerua/Mukure/1643 charged in February 2014 to secure a loan of Kshs 1,100,000, submitted that her claim raised fraudulent dealings over the land, a challenge to the valuation of a second parcel, and claims for special and general damages, and that under Section 13(7) of the ELC Act the Court had jurisdiction where permanent injunction and damages were sought; she distinguished Co-operative Bank v Kangethe as concerning only taking of accounts. The Court applied the Mukisa Biscuit definition of a preliminary objection and the Lillian S principle that jurisdiction is everything, and adopted the reasoning in Lydia Nyambura Mbugua v Diamond Trust Bank Kenya Limited that the sale of charged property is governed by the Land Act and Land Registration Act, vesting jurisdiction in the ELC. Finding that the Plaintiff's amended Plaint sought a declaration that the sale by public auction was fraudulent, unlawful, null and void, the Court held it had jurisdiction and dismissed the preliminary objection with costs to the Plaintiff.

Key legal issues

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01

Definition and nature of a preliminary objection

Holding

A preliminary objection is a pure point of law argued on the assumption that all facts pleaded by the other side are correct; it cannot be raised if any fact has to be ascertained

Reasoning

The Court adopted the classic statement in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd, which defines a preliminary objection as a point of law pleaded or arising by clear implication out of pleadings, which if argued as a preliminary point may dispose of the suit. An objection to jurisdiction qualifies as such a point of law.

p. 2
02

Whether the ELC has jurisdiction over a suit premised on a charge where the challenge is to the sale by public auction

Holding

The ELC has jurisdiction to hear and determine the Plaintiff's suit

Reasoning

Although the suit is premised on a charge instrument, the prayers sought include a declaration that the sale of the land by public auction be declared fraudulent, unlawful, null and void. Following Lydia Nyambura Mbugua v Diamond Trust Bank Kenya Limited, the process of sale of charged property is governed by the Land Act and Land Registration Act, and disputes thereon fall to the ELC under Section 13 of the Environment and Land Court Act. Co-operative Bank v Patrick Kangethe Njuguna was distinguished.

p. 3

Legal principles established

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  • Jurisdiction is everything; without it a court has no power to make one more step and must down tools the moment it finds it lacks jurisdiction
  • A court can only exercise jurisdiction donated to it by the Constitution or legislation or both
  • The ELC and empowered subordinate courts have jurisdiction over disputes relating to charges and the process of sale by a chargee, as these are governed by the Land Act and Land Registration Act

Court orders

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  1. 1.The Notice of Preliminary Objection dated 26th November, 2019 is dismissed with costs to the Plaintiff

Authorities

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Legislation

  • Environment and Land Court ActSection 13(1), 13(2)
  • Constitution of KenyaArticle 162(2)(b), Article 165(5)
  • Land ActNot specified
  • Land Registration ActNot specified

Cases cited (7)

  • Co-operative Bank of Kenya Limited -vs- Patrick Kangethe Njuguna & 5 others
    [2017] e KLR
  • Mukisa Biscuit Manufacturing Co. Ltd –vs- West End Distributors Ltd
    (1969) EA 696
  • The Owners of the Motor Vessel "Lillian S" Vs Caltex Oil (Kenya) Ltd
    (1989) KLR 1
  • Samuel Kamau Macharia & Another Vs Kenya Commercial Bank Limited & 2 others
  • Lydia Nyambura Mbugua Vs Diamond Trust Bank Kenya Limited & another
    [2018] e KLR
  • R Karisa Chengo & 2 others
    (2017) e KLR
  • Stephen Kibowen –vs- Agricultural Finance Corporation
    (2015) e KLR
Jurisdiction invoked
Section 13 of the Environment and Land Court Act No. 19 of 2011 and Article 162(2)(b) of the Constitution

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, "Joyce Nancy Kabiru v Faulu Micro-Finance Bank Limited & 2 others [2022] KEELC 555 (KLR)", Case Analysis (2022). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/555/eng@2022-03-11

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