Christine Kathure Rukunga v New House Limited & 2 Others

c) An order directing the Defendants to pay to the Plaintiff the sum of Kshs. 57,784,295.41/= being the total liquidated loss suffered by the Plaintiff; d) General damages for emotional and mental distress. e) Interest on (c) and (d) above at court rates, f) Costs of this suit, g) Any such other or further relief as this Honourable Court may deem appropriate. 2. The facts are shortly stated. The 1st Defendant was the vendor of Villa Number Fifty-five (55) on Portion Number 2001 (Original Number 1935/30), Malindi. The 2nd Defendant is the management company incorporated to manage the said property. The Plaintiff was the purchaser. The Interested Party was the financier. 3. On or about September, 2013 the 1st Defendant, trading under the name ‘The Baobab Development Group’, approached the Plaintiff with what was presented as a lucrative investment. The representations pleaded are a purchase price of Kshs. 16,000,000/=, a guaranteed rent of Kshs. 20,000/= per night, a guaranteed minimum annual occupancy of 60% translating to 201 days, a minimum gross annual income of Kshs. 4,020,000/= and a service charge of Kshs. 550,000/= per year. It was a term of the engagement that occupancy was the sole responsibility of the 2nd Defendant. 4. Induced by those representations, the Plaintiff exhausted her savings and took friendly and SACCO loans to raise the deposit of Kshs. 4,500,000/=. She borrowed the balance of Kshs. 11,500,000/= from the Interested Party. A charge dated 15 th April, 2014 was registered on 20th May, 2014 over the suit property. MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 2 of 13

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5. The Plaintiff pleads that the representations were false and were made to procure the purchase. She pleads particulars of fraud, false misrepresentation and breach of contract. She pleads that she has received income of only Kshs. 231,980.00 since 2013, that she paid Kshs. 14,107,476.61 towards the loan before defaulting, that she now stands indebted to the Interested Party in the sum of Kshs. 16,239,870.43, and that the property was grossly overvalued at the point of purchase. 6. On 25th February, 2026 this Court, on its own motion, raised the question whether it is clothed with jurisdiction to entertain the suit. Directions issued for written submissions. The Plaintiff filed submissions dated 4th March, 2026. The Defendants filed submissions dated 11th March, 2026. No preliminary objection stands filed on the record. The Defendants’ submissions nevertheless raise a pure point of law in the nature of a preliminary objection, and I treat them as such. 7. The grounds upon which the Defendants impugn the jurisdiction of this Court, distilled from their submissions, are: a. That the suit concerns a charge and the recovery of monies owed by the Plaintiff to the Interested Party on account of that charge; b. That Article 162(2) of the Constitution establishes specialized courts of equal status with the High Court, each exercising peculiar jurisdiction, and that the three courts are not one and the same. c. That jurisdiction flows only from the Constitution or from legislation and cannot be arrogated by judicial craft. d. That a charge is a disposition and not user of land, and that contracts falling under Section 13(2)(d) of the Environment and Land Court Act must be incidental to the use of land, mortgages, MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 3 of 13

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charges, dues and rents falling within the civil jurisdiction of the High Court; e. That the dispute between the parties is commercial in nature, the dominant issue being the settlement of amounts owing on a banker and customer relationship; f. That jurisdiction must exist at the time of filing suit, and that the suit ought to be struck out with costs to the Defendants. 8. In support, the Defendants rely on Karisa Chengo, Jefferson Kalama Kengha & Kitsao Charo Ngati v Republic [2015] eKLR for the proposition that the High Court, the ELRC and this Court are autonomous courts of equal status, each exercising peculiar jurisdiction. They rely on John Kipng’eno Koech & 2 others v Nakuru County Assembly & 5 others [2013] eKLR for the definition of jurisdiction, and on Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR and Samuel Kamau Macharia v Kenya Commercial Bank Limited & 2 others [2012] eKLR for the consequences of its absence. 9. The Defendants’ principal authority is Co-operative Bank of Kenya Ltd v Patrick Kangethe Njuguna & 5 others [2017] eKLR. They urge that the Court of Appeal there held that a charge is an interest in land and a disposition, that the mere acquisition or conferment of an interest in land is not user of that land, and that contracts within Section 13(2) (d) of the Act ought to be incidental to the use of land. They lay emphasis on the finding that, by parity of reasoning, the dominant issue in that appeal was the settlement of amounts owing on a contractual relationship of banker and lender. 10. They accordingly submit that Article 165(5)(b) of the Constitution is not engaged, that the claim is a commercial claim, and that this Court should down its tools and strike out the suit with costs. MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 4 of 13

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11. The Plaintiff, for her part, submits that the dispute arises directly from the sale, purchase and management of immovable property, namely Villa No. 55 on Portion No. 2001 (Original No. 1935/30), Malindi. 12. She relies on Article 162(2) of the Constitution and on the Environment and Land Court Act as conferring original jurisdiction over disputes relating to ownership, transfer or interest in land and any agreements relating to land. She relies further on Hellen Jane Achieng’ Odegi v Kenya Commercial Bank Ltd [2016] KEELC 13 (KLR) and on Cooperative Bank of Kenya Ltd v Patrick Kangethe Njuguna & 5 others (supra) for the proposition that where land is the primary subject, ancillary financial claims arising from the land transaction follow the land dispute. 13. She submits that the gravamen of her claim is misrepresentation as to value, rental income and occupancy guarantees, breach of the obligation to manage the property, and fraud affecting the property. She submits that all claims touching the Interested Party are derivative of the land transaction and wholly ancillary to it. She prays that the suit proceeds without transfer or dismissal. 14. I have considered the pleadings, the rival submissions and the authorities cited. The sole issue falling for determination is whether this Court has jurisdiction to hear and determine this suit. 15. I begin where all such enquiries must begin. In Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR, Nyarangi, JA 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 the proceedings pending other evidence. A court of law downs its tools in respect of the MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 5 of 13

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matter before it the moment it holds the opinion that it is without jurisdiction … Where a court takes it upon itself to exercise jurisdiction, which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgement is given.” 16. The meaning of the term ‘jurisdiction’ was stated in John Kipng’eno Koech & 2 others v Nakuru County Assembly & 5 others [2013] eKLR thus: “Jurisdiction is the practical authority granted to a formally constituted legal body to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility. It is the scope, validity, legitimacy, or authority to preside or adjudicate upon a matter.” 17. Its source is not a matter of election. In Samuel Kamau Macharia v Kenya Commercial Bank Limited & 2 others [2012] eKLR the Supreme Court held: “(68) A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law … without jurisdiction, the Court cannot entertain any proceedings … Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation.” 18. This Court is established under Article 162(2)(b) of the Constitution to hear and determine disputes relating to the environment and the use and occupation of, and title to, land. Pursuant to Article 162(3), Parliament prescribed its jurisdiction at Section 13 of the Environment and Land Court Act, Cap. 8D. Section 13(1) confers original and appellate jurisdiction over all disputes relating to environment and land. Section 13(2) empowers the Court to hear and determine disputes— MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 6 of 13

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(a) relating to environmental planning and protection, climate issues, land use planning, title, tenure, boundaries, rates, rents, valuations, mining, minerals and other natural resources; (b) relating to compulsory acquisition of land; (c) relating to land administration and management; (d) relating to public, private and community land and contracts, choses in action or other instruments granting any enforceable interests in land; and (e) any other dispute relating to environment and land. 19. The High Court, by Article 165(3)(a), holds unlimited original jurisdiction in criminal and civil matters. That jurisdiction is expressly abridged by Article 165(5)(b), which withholds from it matters falling within the jurisdiction of the courts contemplated in Article 162(2). The two jurisdictions are therefore mutually exclusive. As the Court of Appeal put it in Karisa Chengo (supra), the High Court, the ELRC and the ELC are courts of equal status, autonomous of each other, each exercising peculiar jurisdiction, and they are not one and the same. 20. The difficulty in the present suit is that the claim is hybrid. Prayer (a) impugns the validity of the sale agreement for the villa. Prayer (b) impugns the validity of the charge granted to the Interested Party. Prayer (c) is a liquidated money claim. On a literal reading, parts of the claim gravitate towards this Court and parts towards the High Court. The claim is not severable. A test is therefore required. 21. The courts have developed one. In Aketch v Njer & 2 others (Environment and Land Case E096 of 2025) [2025] KEELC 8191 (KLR) (27 November 2025) (Ruling), Yano, J, confronted with a like objection, adopted the predominant issue test as expounded by Sila, J in Lydia Nyambura Mbugua v Diamond Trust Bank Kenya Limited & another [2018] KEELC 1599 (KLR), where the learned Judge stated: “25. But then, one may ask, what if I have a matter which brings forth various issues, some of which fall within the MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 7 of 13

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jurisdiction of the High Court or Employment and Labour Relations Court (ELRC) and some falling within the jurisdiction of the ELC, and yet such dispute cannot be severed for the different issues to be heard in different courts? That is a case with mixed issues, some falling within the jurisdiction of the ELC and some falling within the jurisdiction of the High Court or ELRC, the three superior courts with equal status. In such instance one needs to find out what the predominant issue in the case is, and file suit in the court which has jurisdiction to hear the predominant issue. I am aware of the decision of my brother, Ngugi J, in the case of Suzanne Achieng Butler & 4 Others vs Redhill Heights Investments Limited & Another (2016) eKLR, where the learned judge, when faced with an objection to jurisdiction, was of the view that what is important in determining which court would have jurisdiction, is the “pre-dominant purpose test”, which the judge elaborated as follows: “23. 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. 24. The Court must first determine whether the predominant 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.” On my part, I would modify the above test, and hold the position that what is important when determining whether the court has jurisdiction, is not so much the purpose of the transaction, but the subject matter or issue before court … That is why I hold the view, that in making a choice of which court to appear before, one needs to find out what the predominant issue in his case is, and not necessarily, the predominant purpose of the transaction. If the litigant’s predominant issue will touch on the use of land, or occupation of land, or a matter that affects in one or another, title to land, MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 8 of 13

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then such issue would fall for determination before the ELC.” 22. The learned Judge went on, in a passage equally applicable here, to hold that where a subordinate issue is collateral to the dominant issue and not severable from it, the ELC retains jurisdiction to hear the whole of the dispute, including related issues such as the amounts payable, where these cannot be severed from the dominant issue. 23. Applying that test to the pleadings before me, the predominant issue in this suit is the validity of the agreement for the sale and purchase of Villa Number Fifty-five (55) on Portion Number 2001 (Original Number 1935/30), Malindi. That is what prayer (a) asks. Every other prayer is worked out from it. 24. A sale agreement for a villa is a contract, and it is an instrument granting an enforceable interest in land. It falls squarely within Section 13(2)(d) of the Act. However, the attack by the plaintiff upon its validity is on grounds of fraud and misrepresentation. Fraud and misrepresentation can be of two types in respect of land sale. It can be fraud and misrepresentation on the nature of title held by the seller or as in the present case, regarding the income that the property can yield. In the former case it is obviously a matter affecting title to land, but in the latter, it is not so obvious. The part that involves the fraud and misrepresentation regarding the seller’s title can be entertained in a claim before the ELC without question. The part that involves misrepresentation as to what the property would yield as annual income cannot pass without question into the database of ELC case and must be tested. 25. The provisions of Article 162(2)(b) give jurisdiction to this court over matters relating to title, use and occupation of land. MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 9 of 13

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26. This court is of the view that there is no dispute regarding the validity of the title held by the 1st defendant. It is deemed clean in so far as the plaintiff does not claim that it is tainted by some issue. 27. Regarding the use of the land, there is no dispute as to what use it was put to before the agreement and what use it was to be put to thereafter. 28. Regarding occupation, a casual observer may say, if they reason that the periods of residency by clientele after the sale are considered, that there is a dispute regarding “occupation” of the premises. However, this court is of the view that that is a view that lacks any legal depth. This court thinks that kind of occupation should be confined to its commercial term and definition of “commercial occupancy,” which is its real nature. It is not an occupancy that is disputed as to whether it is legally right or wrong in this case. The only issue that haunts it is whether it fulfils the 1st defendant’s promise regarding commercial lucrativeness of the suit property. 29. The Defendants rely on Co-operative Bank of Kenya Ltd v Patrick Kangethe Njuguna & 5 others (supra). However, the Court of Appeal was careful to state the basis of its holding in that case as follows: “38. Consequently, the assertion that a charge constitutes use of land within the meaning of Article 162 of the Constitution fails. In addition, the cause of action herein was not the validity of the charge, but a question of accounts.” 30. In this court’s view, the dominant issue in the present case involves extensive examination of accounts flowing from the plaintiff’s investment in the suit property. The court handling the matter will not delve into the issue of whether the root of title of the 1 st defendant and consequently of the plaintiff, was tainted by any matter external to the commercial promise the 1st defendant made, or as to whether the use and occupation of the premises was wrongful; the transfer having been MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 10 of 13

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concluded, the issue that remained was whether the property would yield as represented by the 1st defendant. Therefore, just like in the Cooperative Bank case (supra) neither the instrument on transfer nor the enforceable interest created under it was there disputed and the live questions is the computation of income generated to see whether it met the 1st defendant’s promise. Though the plaintiff asks this court void the very instrument by which she acquired the property, and as a consequence enable her to avoid the charge, the real cause of action is in whether the misrepresentations of the 1 st plaintiff are fraudulent and if they have occasioned her commercial loss. The monetary nature of the claim as pleaded clearly demonstrates the genuine character of the suit. By paragraph 22 of the Plaint the Plaintiff pleads: “22. Owing to the above cumulative actions of the Defendants, the Plaintiff has suffered loss as tabulated below. Initial deposit – Kshs. 4,500,000 Stamp duty (4%), charge fee (0.1%), life insurance (0.55%), arrangement fees (1.5%), legal cost and other additional costs – Ksh. 950,088.80 Management fees: in 2017 I paid (Ksh. 30,000), Income 2020 (Ksh. 114,355) taken back as management fees. Total paid Ksh. 144,355. Total loan paid amount – Kshs. 14,107,476.61 Loss of income (Ksh. 20,000 x 201 days x 11years) less management fees not paid, and less income paid out (Ksh. 231,980.00) = Ksh. 38,082,375.00” 31. Perchance the losses set out in the plaint were attributable to faulty title, wrong warranties as to the legally authorized land use and occupation, the matter may have been deemed to be one that falls under the Jurisdiction of this court. However, that tabulation is a claim MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 11 of 13

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in restitution and indemnity against the vendor and the manager not because of faulty title but due to misrepresentations of a commercial nature. It is pleaded as the measure of what the Plaintiff parted with, and what she lost, in consequence of the impugned agreement. It is directed at the Defendants, not at the Interested Party, who is not sued and against whom no prayer for accounts is taken out. 32. I therefore find that the claim does not rest primarily on the transfer and charge documents. It rests on the Plaintiff’s pursuit of full indemnity from the 1st Defendant on account of an alleged misrepresentation of facts which, it is pleaded, led her into the contract, into borrowing, and into default. Such a claim is founded on fraud and misrepresentation touching a sale agreement. The High Court would be well placed to pronounce upon the validity of a sale agreement and upon allegations of fraud and misrepresentation going to title. 33. In the result, this court is of the view that it lacks jurisdiction to hear and determine the present matter and this suit commenced by way of the plaint dated 24th February 2025 is hereby struck out. However, having regard to the nature of the claim, the costs of the suit shall be borne by the Defendants. Dated, Signed and Delivered at Malindi This 1st Day of October 2026. HON. JUSTICE MWANGI NJOROGE JUDGE, ENVIRONMENT AND LAND COURT, MALINDI. MALINDI ELCLC E012 OF 2025 – RULING ON 1/10/2026 Page 12 of 13

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