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ELCStruck OutEnvironment & Land Case 1 of 2023· [2023] KEELC 16603 (KLR)

Mwangi & 2 others v Family Bank Limited & another

Environment and Land Court
28 March 2023
YAY. M. Angima
2,700 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court struck out landowners' suit against Family Bank because disputes over a bank selling charged land belong in the High Court.

What this practically means

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Executive summary

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The three plaintiffs, registered owners of four parcels of land in Nyandarua, sued Family Bank Limited and Regent Auctioneers seeking declarations that the advertisement and intended sale of the suit properties was unlawful, a permanent injunction, and damages. They pleaded that they had charged the properties to secure a Kshs 5,000,000 loan advanced to New Generation Self-Service Stores Ltd, the principal debtor, and that the bank had appointed auctioneers to sell the properties to recover Kshs 622,778,644.99 without serving statutory notices, and that as guarantors they were liable only as a last resort. Simultaneously they sought an interim injunction. When the application came up for inter partes hearing, the court of its own motion raised the question of its jurisdiction, inviting submissions in light of the Court of Appeal decision in Co-operative Bank of Kenya Ltd v Patrick Kangethe. The plaintiffs orally submitted that the court had jurisdiction, or alternatively should transfer the suit to the High Court; the 1st defendant submitted the ELC lacked jurisdiction over charge and guarantee enforcement disputes, relying on Co-operative Bank and Diamond Trust Bank Kenya Ltd v FHH. The court framed two issues: jurisdiction, and whether to transfer the suit. Applying the Court of Appeal authorities, it held that the plaintiffs' complaints concerned the statutory power of sale and recovery of money, not use, occupation or title to land under Article 162(2)(b); a charge is a disposition, not land use. On the second issue, relying on the Supreme Court's decision in Albert Chaurembo Mumba, which restated Kagenyi v Musiramo, the court held it had no power to transfer a suit filed in a court without jurisdiction. The suit was struck out for want of jurisdiction, with costs awarded to the 1st defendant.

Key legal issues

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01

Whether the ELC has jurisdiction over a suit by chargors/guarantors seeking to restrain sale of charged land

Holding

The ELC has no jurisdiction; the dispute is commercial and belongs to the High Court.

Reasoning

The plaintiffs were mere guarantors who charged the suit properties to secure a loan to a principal debtor. Their complaints concerned statutory notices and the bank's statutory power of sale, not use, occupation or title to land. Following Co-operative Bank v Kangethe and Diamond Trust Bank v FHH, a charge is a disposition, not land use, and restraining a statutory power of sale is a commercial matter for the High Court.

02

Whether the ELC could transfer the suit to the High Court

Holding

No; a court without jurisdiction cannot transfer a suit filed before it.

Reasoning

Relying on the Supreme Court's decision in Albert Chaurembo Mumba, which restated Kagenyi v Musiramo, an order for transfer cannot be made unless the suit was first brought to a court with jurisdiction to try it. Parties cannot consent to confer jurisdiction. The authority was held binding by hierarchy, so the court declined to transfer the suit.

p. 5

Legal principles established

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  • Charging land as security does not constitute 'use of land' within Article 162(2)(b); disputes to restrain exercise of statutory power of sale are commercial matters for the High Court.
  • A court without jurisdiction cannot transfer a suit to another court; jurisdiction cannot be conferred by consent.

Court orders

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  1. 1.The Plaintiffs' suit is hereby struck out for want of jurisdiction.
  2. 2.The Defendant is hereby awarded costs of the suit.

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(b)
  • Constitution of Kenya, 2010Article 165(5)
  • Constitution of Kenya, 2010Article 260
  • Environment and Land Court ActSection 13
  • Land ActSection 2
  • Land ActSection 80

Cases cited (5)

  • Co-operative Bank of Kenya Ltd v Patrick Kangethe Njuguna & 5 Others
    [2017] eKLR

    A charge is a disposition, not land use; ELC lacks jurisdiction over statutory power of sale disputes.

  • Diamond Trust Bank Kenya Ltd v FHH
    Civil Appeal No 18 of 2020) [2022] KECA 769 (KLR)

    Restraining a bank's statutory power of sale is a commercial matter for the High Court, not the ELC.

  • PJ Dave Flowers Limited v Limuru Hills Limited
    Malindi Civil Appeal No 123 of 2019

    A purchaser's interest in suit premises conferred jurisdiction on the ELC in that case.

  • Albert Chaurembo Mumba & 7 others v Maurice Munyao & 148 Others
    [2019] eKLR

    A suit cannot be transferred from a court without jurisdiction; parties cannot consent to confer jurisdiction.

  • Kagenyi v Musiramo & Another
    (1968) EALR 43

    Transfer of a suit cannot be ordered unless the suit was first brought to a court with jurisdiction.

Jurisdiction invoked
Article 162(2)(b) of the Constitution and Section 13 of the Environment and Land Court Act

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, "Mwangi & 2 others v Family Bank Limited & another", Case Analysis (2023). Environment & Land Case 1 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/16603/eng@2023-03-28

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