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ELCDismissedNot stated in the excerpt (Preliminary Objection dated 2/08/2021)· [2022] KEELC 625 (KLR)

Olivia Adong’ George Lomoro v Spring Hillpark Limited [2022] KEELC 625 (KLR)

Environment and Land Court
28 March 2022
2,207 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan land court ruled that an arbitration clause in a property agreement does not stop buyers from suing in court when no real dispute for arbitration exists.

What this practically means

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Executive summary

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The Defendants filed a Notice of Preliminary Objection dated 2/08/2021 seeking to have the Plaintiff's suit struck out or referred to arbitration on the basis of Clause 20 of the Agreement for Lease, which contained an arbitral clause, contending that the suit contravened that clause, was an abuse of process, and that the court lacked jurisdiction. The objection was canvassed by written submissions. The court framed two issues: whether the suit abused the arbitral clause and was defective, and whether the court had jurisdiction. The background was a 2014 letter of offer for the sale of an apartment for Kshs. 17,550,000, of which the Plaintiff paid Kshs. 16,100,000; six years later the sale had not completed for want of a change of user, the Defendant offered alternative apartments at fresh prices, and the Plaintiff sought rescission and a refund. Relying on Indigo EPZ Ltd, the court held that an arbitral clause does not oust the court's jurisdiction but merely offers an option, and that courts retain residual jurisdiction to determine whether the agreement exists, is valid, and whether a referable dispute exists. Applying Mukisa Biscuits, the court found that demonstrating a referable dispute would require evidence, taking the matter outside a pure point of law. Applying Owners of the Motor Vessel 'Lillian S', the court affirmed its unlimited jurisdiction as a court of the status of the High Court over land disputes. The preliminary objection was dismissed with costs, costs to be in the cause, with leave granted for the Defendant to respond to the Plaintiff's application.

Key legal issues

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01

Whether the arbitration clause (Clause 20) ousts the jurisdiction of the Environment and Land Court

Holding

The arbitration clause does not oust the court's jurisdiction; the court retains jurisdiction to determine whether the arbitration agreement exists, is valid or inoperative, and whether a referable dispute exists.

Reasoning

Relying on Indigo EPZ Ltd v Eastern and Southern African Trade & Development Bank, the court held that where parties agree to arbitrate, jurisdiction over substantive disputes goes to the arbitrator while Kenyan courts retain residual jurisdiction over peripheral matters, including scrutiny of the arbitration agreement itself. The Environment and Land Court, having the status of the High Court, possesses unlimited jurisdiction over land disputes which a contractual clause cannot remove.

p. 2
02

Whether there exists a dispute capable of being referred to arbitration

Holding

The Defendant failed to demonstrate that a dispute referable to arbitration exists; a reference cannot be made where no dispute falling under the arbitration agreement is shown.

Reasoning

The court noted the plaintiff's claim was for damages, rescission and restitution for the defendant's failure to complete the sale six years after execution. Demonstrating the existence of a referable dispute would require affidavit evidence, which would take the matter outside the purview of a pure preliminary objection under the Mukisa Biscuits principle.

p. 2
03

Whether the preliminary objection is a pure point of law under Mukisa Biscuits

Holding

A preliminary objection raises a pure point of law on assumed pleaded facts and cannot be raised where facts must be ascertained or discretion exercised; the Defendant's objection, requiring enquiry into the existence of a dispute, failed this test.

Reasoning

Applying the classic definition in Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors Ltd, the court reiterated that an objection requiring ascertainment of facts or exercise of judicial discretion is improperly raised. Since determining whether a referable dispute exists would require evidence, the objection ceased to be a pure point of law and could not dispose of the suit summarily.

p. 3

Legal principles established

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  • An arbitration clause does not oust the jurisdiction of the court; courts retain residual jurisdiction to determine whether an arbitration agreement exists, is valid, and whether a dispute referable to arbitration exists.
  • A preliminary objection must be a pure point of law; it cannot be raised where facts have to be ascertained or where evidence is required.
  • Jurisdiction is foundational; a court without jurisdiction must down its tools.

Court orders

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  1. 1.The Notice of Preliminary Objection dated 2/08/2021 is dismissed with costs
  2. 2.The costs of the preliminary objection shall be in the cause
  3. 3.Leave of 21 days granted to the Defendant to file a response to the plaintiff's application
  4. 4.Corresponding leave of 7 days granted to the Plaintiff to file a further affidavit if need be, from the date of service of the Defendant's response
  5. 5.Matter fixed for mention on 31/05/2022 for further directions

Authorities

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Legislation

  • Arbitration ActNot specified
  • Constitution of KenyaProvision enjoining courts to promote arbitration/ADR (not specified)
  • Law Society Conditions of SaleNot specified

Cases cited (8)

  • Niazsons (K) Ltd -v- China Road & Bridge Corporation Kenya
    [2001] eKLR
  • Eunice Soko Mlagui Versus Suresh Parmar & 4 Others
    [2017] eKLR
  • Wringles Company (East Africa) -versus- Attorney General and 3 Others
    (2013) eKLR
  • County Government of Kirinyaga-v-African Banking Corporation Ltd
    [2020] eKLR
  • Joab Henry Onyango Omino -v- Lalji Mehji Patel & Co. Ltd
    (1995 -1998) 1EA 264
  • Indigo EPZ Limited –V- Eastern and Southern African Trade & Development Bank Nairobi
    [2002] 1KLR 2002
  • Mukisa Biscuits Manufacturing Co. Ltd …Vs… West End Distributors Ltd
    (1969) EA 696
  • Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd
    (1989) KLR 1
Jurisdiction invoked
Environment and Land Court jurisdiction under Article 162(2)(b) of the Constitution (court of the status of the High Court with unlimited jurisdiction over environment and land disputes); Arbitration Act invoked by the Defendants

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, "Olivia Adong’ George Lomoro v Spring Hillpark Limited [2022] KEELC 625 (KLR)", Case Analysis (2022). Not stated in the excerpt (Preliminary Objection dated 2/08/2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/625/eng@2022-03-28

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