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ELCPartially Allowed· [2024] KEELC 3852 (KLR)

Muthui v Standard Chartered Bank Kenya Limited & another (Environment and Land Case Civil Suit E193 of 2023) [2024] KEELC 3852 (KLR)

Environment and Land Court
23 April 2024
MMM.D. Mwangi
2,084 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 ruled a borrower's dispute with Standard Chartered over a loan and threatened auction belongs in the High Court's Commercial Division, not the land court.

What this practically means

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Executive summary

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The Plaintiff, a joint proprietor (with her former husband) of Dagoretti/Riruta/6809 (Apartment C 01), sued Standard Chartered Bank Kenya Limited and a second Defendant seeking a permanent injunction against an advertised public auction, an order allowing her to take over loan repayment after a court-ordered audit, costs and general relief. She pleaded that the property was a family home and that damages would not be an adequate remedy. The Defendants filed a preliminary objection on three grounds: that the ELC lacked jurisdiction because the dispute was purely commercial, arising from the bank's statutory power of sale (relying on Co-operative Bank Ltd v Patrick Kangethe Njuguna); that the Plaintiff, as joint proprietor, could not sue alone without her co-proprietor; and that the property had been sold at auction on 29th November 2023, extinguishing the right of redemption. The Plaintiff relied on Article 162(2)(b) and on Shamsi Hauliers, arguing the objections raised facts. The court, per M.D. Mwangi J, held that jurisdiction is a pure point of law, applied the predominant purpose test, and found the suit predominantly concerned the loan account, a matter for the High Court (Commercial and Tax Division) per Cooperative Bank v Kangethe Njuguna. Non-joinder was curable by amendment, and the alleged auction was a disputed factual matter unsuitable for a preliminary objection. The objection succeeded on the first limb only; the court ordered the file transferred to the Commercial and Tax Division of the High Court, Nairobi, with costs in the cause.

Key legal issues

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01

Whether the ELC has jurisdiction over a dispute concerning the exercise of a statutory power of sale and an audit of a loan account

Holding

The ELC lacks jurisdiction; the matter falls within the High Court (Commercial and Tax Division)

Reasoning

Applying the predominant purpose test, the suit's purpose is predominantly to audit the loan account and allow the plaintiff to take over repayment and halt the sale. Relying on Cooperative Bank v Kangethe Njuguna, ELC jurisdiction over 'use' of land excludes mortgages, charges and collection of dues, which lie with the High Court under Article 165(3).

p. 4
02

Whether the suit is fatally defective for non-joinder of the co-proprietor

Holding

Not a fatal defect; the co-owner may be joined in the course of proceedings

Reasoning

The court held that the law allows joinder of a party during proceedings and the pleadings can be amended to add the other owner of the suit property, so the objection failed on this ground.

p. 4
03

Whether the alleged extinguishment of the right of redemption at the auction could ground a preliminary objection

Holding

It could not, because it is a contested factual allegation unsupported by evidence

Reasoning

The plaintiff disputed that the auction took place, and the defendants provided no evidence that the property was sold at the auction. A preliminary objection cannot rest on facts requiring ascertainment.

p. 4

Legal principles established

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  • Where a matter potentially falls within multiple courts, jurisdiction is determined by the predominant purpose test

Court orders

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  1. 1.The file be placed before the presiding Judge of the Commercial and Tax Division of the High Court, Nairobi for further action
  2. 2.The Deputy Registrar of this Court to facilitate the transfer and inform the parties accordingly
  3. 3.Costs of the Preliminary Objection to be in the cause

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(b)
  • Constitution of Kenya, 2010Article 165(3)
  • Environment and Land Court ActSection 13

Cases cited (6)

  • Co-operative Bank Ltd Vs. Patrick Kangethe Njuguna & 5 Others
    (2017) eKLR
  • Shamsi Hauliers Ltd. -vs- Kenya Revenue Authority
  • Nitin Properties Ltd v Singh Kalsi & another
    [1995] eKLR
  • Hassan Ali Joho & another -v- Suleiman Said Shabal & 2 Others
    SCK Petition No. 10 of 2013 [2014] eKLR
  • Owners of the Motor Vessel "Lilian S" vs. Caltex Oil (Kenya) Limited
    [1989] KLR
  • Suzanne Butler & 4 Others v Redhill Investments & Another
    [2017] eKLR
Jurisdiction invoked
Article 162(2)(b) of the Constitution and Section 13 of the ELC Act (question of ELC vs High Court jurisdiction)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Muthui v Standard Chartered Bank Kenya Limited & another (Environment and Land Case Civil Suit E193 of 2023) [2024] KEELC 3852 (KLR)", Case Analysis (2024). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/3852/eng@2024-04-23

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