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ELCStruck Out· [2025] KEELC 3144 (KLR)

Aden & 4 others v Kiptum & 6 others; Xplico Insurance Company (Interested Party) (Environment & Land Case E056 of 2024) [2025] KEELC 3144 (KLR)

Environment and Land Court
3 April 2025
2,001 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 struck out a land dispute because the real deal was shares, not land, so the High Court must hear it.

What this practically means

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Executive summary

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This ruling of the Environment and Land Court at Mombasa (Y. M. Angima, J) determines two notices of preliminary objection dated 22.10.2024 (5th–7th defendants) and 31.10.2024 (1st and 2nd defendants) seeking dismissal of the plaintiffs' suit and notice of motion dated 21.06.2024. The plaintiffs alleged that the 3rd, 4th and 5th plaintiffs transferred Parcels No. MN/III/7025 and MN/III/7023 to the interested party (an insurance company) so that the 1st and 2nd plaintiffs or their nominees could be allotted shares and directorship; the 2nd defendant allegedly declined to admit the parcels to determine the capital adequacy ratio. They sought, inter alia, cancellation of the transfers and reinstatement as registered proprietors. Framing six issues, the court found jurisdiction dispositive. Applying the predominant purpose test from Suzanne Achieng Butler v Redhill Heights Investments and guided by Samuel Kamau Macharia and Co-operative Bank v Kangethe Njuguna, it held the transaction was predominantly a sale of shares in an insurance company, with the land merely consideration, so the ELC lacked jurisdiction under Article 162(2)(b) and Section 13 of the ELC Act. The remaining objections (locus standi, exhaustion, res judicata, sub judice) were not reached. The court struck out the plaint and made no order as to costs, since the dispute may still be resolved in the correct forum.

Key legal issues

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01

Whether the ELC has jurisdiction over a dispute where land was transferred as consideration for shares

Holding

The court lacks jurisdiction because the predominant purpose was the sale of shares in an insurance company; the land was merely consideration

Reasoning

Applying the predominant purpose test from Suzanne Achieng Butler, the court examined the plaint. The plaintiffs transferred parcels of land to the interested party so that the 1st and 2nd plaintiffs or their nominees could be allotted shares and directorship. Although the plaintiffs sought cancellation of the transfers and reinstatement as registered proprietors, the core of the dispute was the share allocation in the insurance company, a commercial matter for the High Court, not the ELC.

p. 4
02

Whether the remaining preliminary objections (locus standi, exhaustion, res judicata, sub judice) needed determination

Holding

No; once jurisdiction fails, the other issues need not be determined

Reasoning

The court held that a finding on jurisdiction renders determinations on the remaining issues academic, since the court without jurisdiction can entertain nothing further.

p. 5
03

Costs

Holding

No order as to costs despite the general rule that costs follow the event

Reasoning

Although costs ordinarily follow the event under Section 27 of the Civil Procedure Act, the court reasoned the dispute was filed in the wrong forum and may still be resolved in the right forum, making a no-costs order appropriate.

p. 5

Legal principles established

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  • Where a transaction involves both land and shares, jurisdiction is determined by the predominant purpose of the transaction
  • A court without jurisdiction must down its tools

Court orders

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  1. 1.The plaint dated 21.06.2024 and filed on 25.06.2024 is hereby struck
  2. 2.There shall be no orders as to costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(b)
  • Environment and Land Court ActSection 13
  • Environment and Land Court ActSection 19(2)
  • Insurance ActSection 173
  • Insurance ActSection 204A(3)
  • Fair Administrative Action ActSection 9(2)(3)
  • Civil Procedure ActSection 7
  • Civil Procedure ActSection 6
  • Civil Procedure Act (Cap 21)Section 27 (proviso)
  • Land ActSection 150

Cases cited (5)

  • Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others
    [2012] eKLR
  • Suzanne Achieng Butler & 4 others v Redhill Heights Investments Limited & another
    [2016] eKLR
  • Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others
    [2017] eKLR
  • Hussein Janmohamed & Sons -vs- Twentsche Overseas Trading Co. Ltd
    [1967] EA 287
  • Obsidition Investments Limited v Attorney General & Another, Xplico Insurance Company Limited (Ex parte Application) HCCOMM.E303.2020
    [2019] eKLR
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, "Aden & 4 others v Kiptum & 6 others; Xplico Insurance Company (Interested Party) (Environment & Land Case E056 of 2024) [2025] KEELC 3144 (KLR)", Case Analysis (2025). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/3144/eng@2025-04-03

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