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ELCOther· [2024] KEELC 104 (KLR)

Pilot Gatias Limited & 2 others v NCBA Bank Kenya PLC & another (Environment & Land Case E143 of 2023) [2024] KEELC 104 (KLR)

Environment and Land Court
15 January 2024
2,738 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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What this practically means

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Executive summary

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The Plaintiffs, who had obtained a loan facility from the 1st Defendant bank secured by a charge over L.R. No. 209/2272 along Charles Rubia Road, Nairobi, moved the Environment and Land Court by application dated November 1, 2023. They sought a temporary injunction restraining the bank and its auctioneers from selling the property, a declaration that the advertisement for sale of October 30, 2023 was a nullity for breaching rule 15(d) of the Auctioneer Rules (advertisement less than 45 days after notice), and an order for a loan statement and joint audit of their indebtedness. The bank opposed, raising a jurisdictional objection that the dominant issue was borrower-lender indebtedness and the exercise of statutory power of sale, which lies within the High Court's jurisdiction under article 165(3) of the Constitution. The bank also contended the plaintiffs had misrepresented the auction date and that it had complied with section 97 of the Land Act on valuation. The Court framed two issues: jurisdiction, and whether the plaintiffs had made out a case for the orders sought. Relying on the Supreme Court's decision in Samuel Kamau Macharia, article 162(2)(b) and section 13 of the ELC Act, and the predominant purpose test in Suzanne Butler v Redhill Investments, the Court found there was no dispute as to ownership, use, occupation or title to the land; the dominant issue was indebtedness and the statutory power of sale, squarely within the High Court's jurisdiction. Following Pamoja Women Development Programme and Spinners & Spinners, the Court declined to strike out the suit, holding that specialized courts were not meant to be jurisdictional traps. The Court transferred the suit to the High Court (Commercial and Tax Division), discharged the interim orders, and directed that costs abide the determination of the main suit.

Key legal issues

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01

Jurisdiction of the ELC over a borrower-lender dispute concerning exercise of statutory power of sale

Holding

The ELC lacks jurisdiction; the dominant issue is the settlement of amounts between borrower and lender vis-à-vis the statutory power of sale, which falls within the High Court's jurisdiction under article 165(3).

Reasoning

The Court examined article 162(2)(b) and section 13 of the ELC Act, then applied the predominant purpose test from Suzanne Butler v Redhill Investments. Although the suit concerned a charged property, the Court found there was no dispute as to ownership, use, occupation or title to the land; the dominant issue was the indebtedness and exercise of statutory power of sale, which belongs to the High Court.

p. 4
02

Whether a suit filed in a court without jurisdiction must be struck out

Holding

No; following Pamoja Women Development Programme and Spinners & Spinners, the appropriate remedy is transfer to the cognate superior court.

Reasoning

The Court adopted the reasoning that constitutionalizing specialised courts was not meant to create jurisdictional traps for litigants. Where a close case is filed in a court of cognate jurisdiction, the interests of justice favour transfer rather than striking out, since parties deserve a fair chance to have cases determined on merit.

p. 6

Legal principles established

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  • Jurisdiction flows from the Constitution or legislation, and a court cannot expand its jurisdiction beyond what is conferred by law.
  • Where a dispute over a charged property is predominantly about borrower-lender indebtedness and the exercise of statutory power of sale, the High Court rather than the ELC has jurisdiction.
  • In close cases filed in a court of cognate jurisdiction, the proper course is transfer to the appropriate cognate court rather than striking out the suit.

Court orders

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  1. 1.This suit is hereby transferred to High Court (Commercial and Tax Division) and the Deputy Registrar of this Court is directed to facilitate the same
  2. 2.The existing interim orders are hereby discharged
  3. 3.Costs to abide the determination of the main suit

Authorities

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Legislation

  • Constitution of KenyaArticle 162(2)(b)
  • Constitution of KenyaArticle 165(3)
  • Environment and Land Court ActSections 4 and 13
  • Land ActSections 97(1) and 97(2)
  • Auctioneer RulesRule 15(d)

Cases cited (12)

  • Giella vs Cassman Brown
    (1973) EA 358
  • Jan Bolden Nielsen v Hemen Phillips Steya also known as Hermannus Phillip's Steyn & 2 others
    (2012) eKLR
  • Mrao vs First American Bank of Kenya Ltd & 2 others
    (2003) KLR 125
  • Cooperative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others
    (2017) eKLR
  • Zum Zum Investment Limited v Habib Bank Limited
    (2014) eKLR
  • Palmy Company Limited v Consolidated Bank of Kenya Limited
    ML HCCC No. 527 of 2013 (2014) eKLR
  • Silas Misoi Yes T/A Silo Investment v Transnational Bank Limited & another
    HC COMM No. E101 of 2020 (2020) eKLR
  • Geoffrey Kinuthia Mungai & Another v Progressive Great Limited
    (2018) eKLR
  • Samuel Kamau Macharia -vs- Kenya Commercial Bank & 2 others
    Civil Appl. No. 2 of 2011
  • Suzanne Butler & 4 others v Redhill Investments & another
    [2017] eKLR
  • Pamoja Women Development Programme & 3 others v Jackson Kihumbu Wang'ombe & another
    Kiambu H.C. Civil Suit No. 16 of 2016
  • Spinners & Spinners Limited v Spinners & Spinners Limited
    [2017] eKLR
Jurisdiction invoked
Article 162(2)(b) of the Constitution; sections 4 and 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, "Pilot Gatias Limited & 2 others v NCBA Bank Kenya PLC & another (Environment & Land Case E143 of 2023) [2024] KEELC 104 (KLR)", Case Analysis (2024). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/104/eng@2024-01-15

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