Ashbourne Properties Limited v Thegeya & another (Environment & Land Case 365 of 2015) [2022] KEELC 2894 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Jurisdiction of the Environment and Land Court over a suit with mixed company-law and land-law claims
The court lacked jurisdiction over the winding-up prayer (a commercial matter) but had jurisdiction over the challenge to the transfer of the suit property.
The court's jurisdiction is limited to matters set out in Section 13 of the Environment and Land Court Act and Article 162(2)(b) of the Constitution. Issues of directorship, shareholding and winding up are commercial matters for the High Court. However, the prayer seeking cancellation of the transfer of land falls squarely within the Environment and Land Court's jurisdiction, so the court could determine the validity of the transfer.
Validity of the transfer of the suit property to the 1st Defendant
The transfer was invalid, null and void; the suit land never passed from the Plaintiff company.
It was common ground that the property was transferred to the plaintiff company to secure financing from HCFK. No consideration was proved for the transfer back to the 1st Defendant. The requisite statutory procedures under the Registration of Titles Act (as preserved by Section 107 of the Land Registration Act) were not followed, there were no board resolutions, minutes or meetings, and the persons executing the transfer were not directors or shareholders of the company.
Lawfulness of the changes to the shareholding of the 2nd Defendant
The share changes were unlawful as the Articles of Association procedures for transfer of shares were not followed and no notice was given to the plaintiff.
Clauses 6 to 9 of the Articles of Association required a written transfer notice specifying the number of shares and price, and the directors were required first to offer the shares to existing members. DW1 admitted he did not notify the plaintiff of the transfer. Following the Arthi Highway Developers decision and Section 75 of the repealed Companies Act, failure to follow these procedures invalidated the transfer. The alleged new shareholders were imposters whose registration conferred no rights known to law.
Legal principles established
#- Failure to follow procedures set out in the Memorandum and Articles of Association on transfer of shares invalidates a transfer
- A registered proprietor's title under the repealed Registration of Titles Act is indefeasible except on proof of fraud or misrepresentation to which the proprietor is a party, and rights acquired under repealed Acts continue to be governed by the law applicable immediately prior to the Land Registration Act, 2012
- Jurisdiction is everything; where a court has no jurisdiction it must down its tools
Court orders
#- 1.The Transfer of the suit property L.R. No. 209/9859 situate at Dam Estate Langata to the 1st Defendant is cancelled together with all subsequent entries on the title, and an appropriate order to issue to the relevant Land Registrar
- 2.The assets and liabilities of the Company be shared out in proportion to the shareholding as at 15th May 2012 in relation to the dispute of the suit property
- 3.In relation to prayer (c), parties to abide by the laws on winding up of companies and seek the appropriate forum for this
- 4.The costs of the suit are awarded to the Plaintiff
- Jurisdiction invoked
- Article 162(2)(b) of the Constitution of Kenya and Section 13 of the Environment and Land Court Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ashbourne Properties Limited v Thegeya & another (Environment & Land Case 365 of 2015) [2022] KEELC 2894 (KLR)", Case Analysis (2022). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/2894/eng@2022-05-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.