Sidian Bank Ltd v Olitunya & 4 others

4. To support the issue of jurisdiction, counsel made reference to the following authorities: Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR, Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR, Patrick Ndegwa Munyua v Benjamin Kiiru Mwangi & another [2020] eKLR as well as Article 162(2) of the Constitution, Section 13 of the Environment and Land Court Act and Section 150 of the Land Act. 5. Counsel submitted that the issue of recovery of debt and enforcement of personal guarantees was within the unlimited original jurisdiction of the High Court as provided under Article 165(3) of the Constitution. To support this position, counsel made reference to the following case laws: Kisimani Holdings Limited & Another v Fidelity Bank Limited [2013] eKLR, Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] eKLR and Thomas Mutuku Kasue v Housing Finance Company Ltd (HFC) & another [2021] eKLR. 6. As such, counsel asked court to strike out the suit for it to be led in the appropriate court with jurisdiction because it did not have capacity to transfer the suit for lack of jurisdiction citing: Thomas Mutuku Kasue v Housing Finance Company Ltd (HFC) & another [2021] eKLR, Stella Kavutha Muthoka & another v Kenya Women Microfinance Bank Ltd [2021] eKLR, Tata Chemicals Magadi Limited v County Governor, Kajiado County & another; National Environmental Management Authority & another (Interested Parties) (2020) eKLR and Phoenix of East Africa Assurance Co. Ltd v S M Thiga T/A Newspaper Service (2019) eKLR. The Plainti ’s Submissions 7. In their submissions dated 7th July 2023, counsel submitted that the court had jurisdiction to continue hearing the suit because the suit originated from the contract entered between them and the Defendant’s where the 2nd Defendant charged the suit property as security for repayment of the nancial advances by the Plainti. Reference was made to Lydia Nyambura Mbugua vs Diamond Trust Bank Kenya Ltd & Another [2018], Mathew Namusei Chahasi vs Cooperative Bank Ltd & Another [2021] eKLR which held that issues relating to charges, the rights and obligations that arise in such instruments, are proprietary issues that squarely fall within the ELC jurisdiction. Counsel thus pointed that the predominant issue was not the charge, but use of a fraudulent title to the suit property to secure nancial services. 8. Counsel submitted that whereas the suit against the 1st and 5th Defendants was withdrawn the hearing of the main suit had already commenced where two Plainti witnesses had testied. However, PW2 was yet to be cross-examined. Counsel indicated that the Plainti had only two more witnesses to call to close its case and the Defence only had one witness to call. As such, the suit had proceeded substantially and the objection was only a delay tactic from the Defendants’. And should the court nd that it was not clothed with jurisdiction to continue hearing the suit, then it should not strike it out but transfer it to the High Court because when the suit commenced. Reference was made to the Supreme Court case of Albert Chaurembo Mumba & 7 others vs Maurice Munyao & 148 others [2019] eKLR which held: “… However, as it was well elucidated in the case of Kagenyi v Musiramo & Another (1968) EALR 43, an order for transfer of a suit from one court to another cannot be made unless the suit has been brought, in the rst instance, to a court which has jurisdiction to try it…” 9. Therefore, in the interests of justice, the suit should be transferred and not struck out because the court had jurisdiction to determine it as was held in John Mwangi Karanja cs Alfred Ndiangui [2011] eKLR. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/21369/eng@2023-11-09 2

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Analysis and Determination 10. I have considered the Preliminary Objection, rival submissions, the authorities cited. The issue for determination is: i. 11. Whether the Preliminary Objection raised by the 2nd, 3rd and 4th Defendant that this court does not have jurisdiction to continue hearing the case is merited. It is well-established that a preliminary objection should be raised based on a legal issue rather than disputed facts, as was ingrained in Mukisa Biscuits Manufacturing Co. Ltd vs West End Distributors Ltd (1969) EA 696. This legal principle was also articulated by the Supreme Court of Kenya in Aviation & Allied Workers Union Kenya v Kenya Airways Limited & 3 others [2015] eKLR as follows: (15) Thus a preliminary objection may only be raised on a “pure question of law”. To discern such a point of law, the Court has to be satised that there is no proper contest as to the facts. The facts are deemed agreed, as they are prima facie presented in the pleadings on record. 12. The 2nd, 3rd and 4th argue that this court lost its jurisdiction once the matter against the 1st and 5th Defendants was withdrawn which meant the only prayer for consideration was on the issue of recovery of debt which is in the High Court’s jurisdiction. The Plainti contested this objection by stating that the crux of the suit was the property charged by the 2nd, 3rd and 4th against the loan facility advanced by the Plainti. 13. To determine if the objection of jurisdiction raised by the 2nd, 3rd and 4th Defendants is merited and can be determined on the face of the pleadings, this court has perused the Further Amended Plaint dated 20th March 2019 and nds the following pleaded facts: “ 6. At all material times, the Plainti was registered as the rst charge against that property known as Title Number Kajiado/Kaputiei North/24052 registered in the name of Alice Olwalo Litunya, the 1st Defendant herein. 7. …. Sometime in the year 2014, the 2nd Defendant herein, through its Directors, the 3rd and 4th Defendants herein made an application for a loan facility to the Plainti bank and two letters of oer were subsequently issued to the 2nd Defendant. 9. … that in contemplation of the creation of a charge over the suit property, the 1st Defendant and one or both of the 2nd Defendant’s directors surrendered the original title for the property to the Plainti. 11. … on 4th December 2014, the 1st and the 2nd Defendants executed a charge instrument in favour of the Plainti Bank. 12. … on 5th December 2014, the Plainti through their advocates … in conjunction with a director of the 2nd Defendant lodged the duly executed charge instrument for assessment at the Kajiado District land Registry… 14. … the 2nd Defendant variously defaulted in repayment of the loan amount… causing the Plainti to issue a demand letter for the payment of the outstanding amount. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/21369/eng@2023-11-09 3

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16. … on 8th August 2016, the Plainti sent a 40 days notice to sell to the 1st and 2nd Defendants… 18. … in August 2016 the Plainti decided to conduct an ocial search on the property to ensure that their interest was duly covered, but the Plainti was surprised to nd that the search results indicated that the property was free from any encumbrance. 20. … upon perusal of the registry le, the advocates informed the Plainti that the 1st Defendant had led a deed of indemnity dated 21st October 2015 indicating that they had been unable to procure an ocial search over the property due to the fact that the property’s register of green card in the registry was missing. 21. … the 1st Defendant falsely declared that she had never charged the suit property as security, mortgage or charge to any person. 27. … the 1st and 2nd Defendants failed to disclose to the Plainti that the register reconstructed by the 5th Defendant did not show the charge registered in favour of the Plainti … hence prejudicing the Plainti’s interest in the suit property. 28. … as a consequence of the actions of the Defendants the Plainti continues to suer immense nancial loss. 39. The Plainti thus prays for: d. 40. A permanent injunction restraining the Defendants … from interfering, transferring, selling, developing … with the suit property known as Title Number Kajiado/Kaputiei North/24052 in any manner whatsoever without the consent of the Plainti as charge. In the alternative… (a) A declaration that the 2nd Defendant is bound by the charge document as a contract to repay the loan …” 14. The parties have submitted on the legal provisions that grant this court jurisdiction as well as several case laws on the issue of jurisdiction and this court shall not belabour the same. At this juncture, without delving into the substantive aspects of the case, it is discerned from the pleadings, as demonstrated by the above excerpt, that the dispute originates from Land Title Number Kajiado/ Kaputiei North/24052, which was used as collateral for a loan extended to the 2nd, 3rd, and 4th Defendants. Consequently, the withdrawal of the 1st and 5th Defendants does not aect the underlying cause of action in the lawsuit. 15. Therefore, this court arms its jurisdiction to proceed with the case and render a nal verdict. 16. The preliminary objection is hereby dismissed with costs to the Plainti. DATED, SIGNED AND DELIVERED VIRTUALLY AT KAJIADO THIS 9TH DAY OF NOVEMBER 2023. L. KOMINGOI https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/21369/eng@2023-11-09 4

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JUDGE. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/21369/eng@2023-11-09 5

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