Mwangi & another v Stanbic Bank Kenya PLC & another

3. An order of a permanent injunction be and is hereby issued barring and restraining the Defendants, their servants, agents and or anybody acting at the behest of the Defendants from advertising, re-advertising, oering for sale by public auction or in any other way dealing with that property known as Villa Number 5, erected on Land Reference Number 4857/70, in a purported exercise of the 1st Defendant's Statutory Power of Sale, pending the hearing and determination of this Suit. 4. This Honourable Court be pleased to exercise its power to reopen the Charge entered into between the 1st Plainti and the 1st Defendant and: a. direct that the charge shall have eect subject to the modications that the same shall henceforth apply only to the Villa Number 5, erected on Land Reference Number 4857/70; b. require the 1stDefendant as Chargee to repay the part of the sums paid and or expenses incurred by the 1st Plainti towards perfection of a charge over the property known as Villa Number 4, erected on Land Reference Number 4857/70; c. require the 1st Defendant as Chargee to pay such compensation to the 1st Plainti which the Court shall think t; and d. direct the 1st Defendant as Chargee, to cease acting in a discriminatory manner with respect to the granting of charges and order, without prejudice to any of the prayers contained herein, that the 1st Defendant do remedy its breach of the loan facility and forthwith disburse the sum of Kshs. 16,900,000/= that remains due under the charge and loan facility agreement. 5. Pursuant to and or contemporaneously with Order Number 4 above, an order of mandatory injunction to compel the 1st Defendant to execute a variation of Charge and to discharge the Charge over the property known as Villa Number 4, erected on Land Reference Number 4857/70, and to reconvey the said Property back to the 1st Plainti free from the Charge or any other encumbrance whatsoever. 6. Costs of this Application be borne by the Defendants. 2. The grounds are on the face of the application and are set out in paragraphs (a) to (t). 3. It is supported by the Adavit of Duncan Githiga Mwangi the director/shareholder of the 2nd Plainti. The Plainti/Applicant’s claim is that he sought a loan facility of Kshs. 36,500,000 from the 1st Defendant/Respondent on or about 16/07/2020 in order to enter into a lease of the 2 properties known as Villa No. 4 and 5 on parcel No. LR 4857/70. The loan facility was to have a corporate guarantee executed by the 2nd Plainti as per annexure DGM-1 which is a copy of the Term Loan Letter. 4. The 1st Plainti states that he has serviced the loan faithfully except for the Covid period when he fell into arrears as evidenced by annexure DMG3 which show screenshot of messages of acknowledgement of payments to 1st Defendant. 5. In their Replying Adavit, the 1st Defendant has stated that the application is an abuse of Court process since 1st Defendant is exercising its statutory power of sale. It is the contention of the 1st Defendant that the ELC has no jurisdiction since the dispute is about settlement of the amounts between a borrower and a lender which is governed by Article 165 (3) of the Constitution. https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/18681/eng@2025-03-11 2

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6. Now, I have examined the plaint led in this matter and I have realized that it is indeed about a loan, charge and repayment of the borrowed amount. 7. Sections 1A and 1B of the Civil Procedure Act introduced the overriding objective of the Act and the Civil Procedure Rules made thereunder. That overriding objective is to facilitate the just, expeditious, proportionate and aordable resolution of the civil disputes governed by the Act. Parties to such proceedings and their advocates are under a statutory duty to assist the Court to further that overriding objective. The Constitution of Kenya, 2010 introduced the constitutional principle that in exercising judicial authority the Courts and tribunals shall be guided by the principle, among others, that justice shall be administered without undue regard to procedural technicalities. 8. Nairobi HC Miscellaneous Civil Application No. 357 of 2010, John Mwangi Karanja vs. Alfred Ndiangui (Unreported). In a ruling dated 12th May 2010 which Judge Lucy Gacheru delivered she stated as follows – “ It has been settled law for many years now that this Court has no jurisdiction under section 18 of the Act to transfer a case from one subordinate Court to another if the original Court had no jurisdiction in the rst place to hear and determine the suit. This jurisprudence was founded upon the well-known Ugandan case of KAGENYI –VS- MUSIRAMO & ANOTHER [1968] EA 43 where it was held that whereas section 18 of the Ugandan Civil Procedure Act (which is identical to section 18 of our own Civil Procedure Act) gives the High Court a general power of transfer of all suits, which power may be exercised at any stage of the proceedings, even suo motu, by the Court, an order for transfer of a suit from one Court to another cannot be made unless the suit has been in the rst instance brought to a Court which has jurisdiction to try it.” 9. Thus, if a suit nds itself in the wrong Court, as this one has, it is in the interest of justice and in the interest of all concerned that the suit be forwarded to the appropriate Court with jurisdiction so that the issues in dispute can be properly and nally adjudicated. After all, the overriding objective of the Civil Procedure Act and Rules is to facilitate the just, expeditious, proportionate and aordable resolution of the civil disputes governed by the Act. 10. As is evident from the prayers sought in the Plaint, the bulk of the prayers relate to a charge for a loan. Applying the pre-dominant purpose test, it can safely be said that this case falls squarely under the jurisdiction of the High Court Commercial Division. My conclusion nds support in the case of Mohamed Ali Baadi and Others vs. Attorney General & 11 others (2018)eKLR in which a 5-judge bench of the High Court applying the predominant purpose test in hybrid cases observed: “ 100. The Supreme Court in Republic vs Karisa Chengo & 2 Others [47] amplied and pertinently held that each of the Superior Courts established by or under the Constitution has jurisdiction only over matters exclusively reserved to it by the Constitution or by a statute as permitted by the Constitution. The holding in this case however, does not resolve the knotted question of which Court among the High Court and the two equal status Courts under Article 162(2) (b) should be seized of jurisdiction in controversies in hybrid cases. Hybrid cases are cases where issues cut across the exclusive jurisdiction reserved for each of the three Courts. As demonstrated by the issues identied above, this is one such hybrid case. https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/18681/eng@2025-03-11 3

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101. In earlier cases, our superior Courts approached the question using the lens of concurrent jurisdiction. This approach is exemplied by Ledidi Ole Tauta & Others vs. Attorney General [48] where a three-judge bench of the High Court after deeply discussing the question held inter alia: .…having regard to the Constitutional provision under Article 165(3) (b) and section 13(3) of the Environment and Land Court Act, in Constitutional matters touching on the violation and/or infringement of the fundamental bill of rights and freedoms as far as the same relate to the environment and land both the High Court and the Environment and Land Court have concurrent jurisdiction to deal with such matters and a party could bring such matters either before the High Court and/or before the Environment and Land Court..... 102. Similarly, in Patrick Musimba vs. National Land Commission & 4 Others [49] the Petitioner challenged the manner in which compulsory acquisition of land had been conducted in Kibwezi Constituency and the process of the Environmental and Social Impact Assessment (ESIA) for the construction of the Standard Gauge Railway (SGR), another mega-infrastructural project. A preliminary objection was raised by the Respondents challenging the jurisdiction of the Court on the ground that the Court empowered to hear and determine such matters was the ELC established under the Environment and Land Court Act [50] as read with Article 162 of the Constitution. The Respondents submitted that both Articles 162 and 165 of the Constitution limited the jurisdiction of the High Court. They further argued that the presiding Judges empanelled by the Chief Justice were not qualied to handle the Petition as they had not been appointed as ELC Judges. The Respondents further argued that the jurisdiction of the Court could only ow from the appointment of the Judge. 103. After a wide-ranging analysis and consideration of the applicable provisions of the Constitution and in particular, Articles 165(3), 162(2) and (3), and section 13 of the Environment and Land Court Act, and the amendments thereto, the ve Judge Bench of the High Court held as follows: – In its strict sense the “jurisdiction” of a Court refers to the matters the Court as an organ not an individual was competent to deal with and reliefs it was capable of granting. Courts were competent to deal with matters that the instrument, be it the Constitution or a piece of legislation, creating them empowered them to deal with. Such jurisdiction could be limited expressly or impliedly by the instrument creating the Court. The jurisdiction of the High Court was unlimited save only as provided by the Constitution. The High Court had express jurisdiction to deal with and determine matters of a Constitutional nature under article 165(3) of the Constitution. Indeed, while the Constitutional claw back was found under article 165(5), article 165(3) (e) of the Constitution further conrmed that the High Court’s jurisdiction could be extended further pursuant to any statutory provision. For example the Judicature Act which conferred the specialized admiralty jurisdiction. The Constitution however did not provide for any other written law to limit the jurisdiction of the High Court. https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/18681/eng@2025-03-11 4

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Both the High Court and the ELC Court had a concurrent and or coordinate jurisdiction and could determine Constitutional matters when raised and do touch on the environment and land. Neither the Constitution nor the ELC Act limited the High Court’s jurisdiction in that respect …. A closer reading of the Petition especially the complaints and the reliefs sought revealed that the petition was simply not about the environment and land. Substantial questions had been raised not only on the process of compulsory acquisition of land but also on the integration and generation of the environment. Questions had been raised about denial of access to information as well as a threatened contravention or violation of the right to fair administrative action. Questions had also been raised on the violation and or further threatened violation of the dignity of the petitioner’s constituents. ….. It could not have been the intention of the draftsmen of the Constitution that when the Court was faced with a mixture of causes of action touching on the Constitution, especially on fundamental rights, a separationalistic approach was to be adopted by the Court and half the claim dispatched to one Court as the other half was retained. 104. A similar position was held by a three-judge bench in Leisure Lodges Ltd v Commissioner of Lands & 767 others [51] citing the above decisions. 105. Subsequent to the above decisions, our Courts have identied the correct approach to determine the appropriate superior Court to hear such hybrid cases. The Courts have resolved the issue by inquiring what the most substantial question or issue presented in the controversy is. For example in Suzanne Butler & 4 Others v Redhill Investments & Another [52] the Court stated the test in the following words: "When faced with a controversy whether a particular case is a dispute about land (which should be litigated at the ELC) or not, the Courts utilize the Pre-dominant Purpose Test: In a transaction involving both a sale of land and other services or goods, jurisdiction lies at the ELC if the transaction is predominantly for land, but the High Court has jurisdiction if the transaction is predominantly for the provision of goods, construction, or works. The Court must rst determine whether the pre-dominant purpose of the transaction is the sale of land or construction. Whether the High Court or the ELC has jurisdiction hinges on the predominant purpose of the transaction, that is, whether the contract primarily concerns the sale of land or, in this case, the construction of a townhouse. Ordinarily, the pleadings give the Court sucient glimpse to examine the transaction to determine whether sale of land or other services was the predominant purpose of the contract. This test accords with what other Courts have done and therefore lends predictability to the issue." 11. As was held in Owners of the Motor Vessel Lillian S vs. Caltex Kenya, (1989) KLR the Court will down its tools as soon as it discovers that it lacks jurisdiction to hear the dispute before it. The Court stated “jurisdiction is everything. Without it, a Court has no power to make one more step. Where a Court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/18681/eng@2025-03-11 5

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A Court of law down tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.” 12. I am conscious of the fact that this case was led at the Environment and Land Court instead of the Commercial Division of High Court. Before this Court, the 1st Defendant raised the issue of jurisdiction, hence, this is the ruling determining the said issue. 13. Jurisdiction must be conferred by the law before it is acquired. If this Court ventures into the forbidden sphere and entertain this suit without jurisdiction, the proceedings will be a nullity. I decline the invitation to venture into this forbidden sphere. This nding is sucient to halt any further proceedings in this Court. Having so found, I see no need to address the other issues raised in the application. I direct that this le be transferred to the Commercial Division of the High Court for hearing and determination. I make no orders as to costs. 14. Orders accordingly. DATED, SIGNED AND DELIVERED VIRTUALLY AT THIKA THIS 11TH DAY OF MARCH 2025 VIA MICROSOFT TEAMS. ……………………… MOGENI J JUDGE In the presence of: Mr. Gatheru Gathemia for the Plainti Mr. Mwai Muthoni holding brief for Ms. Kariuki for the 1st Defendant Mr. Melita - Court Assistant https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/18681/eng@2025-03-11 6

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